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Two 150-horsepower (HP) motors are being considered for installation at a municipal sewage-treatment plant. The first costs $4,500 and has an operating efficiency of 83%. The second costs $3,600 and has an efficiency of 80%. Both motors are projected to have zero salvage value after a life of 10 years. If all the annual charges, such as insurance, maintenance, etc., amount to a total of 15% of the original cost of each motor, and if power costs are a flat 5 cents per kilowatthour, how many minimum hours of full-load operation per year are necessary to justify purchasing the more expensive motor at i = 6%? (A conversion factor you might find useful is 1 HP = 746 watts = 0.746 kilowatts.)

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Operation Management, Management Studies

Category:- Operation Management
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