Suppose that there are two alt electric motors that provide 100hp output. An Alpha motor can be purchased for $12,500 and has an
efficiency of 74%, and estimated life of 10 yrs, and estimated maintenance cost of $500/yr. A Beta motor will cost $16,000 and has an efficiency of 92%, a life of 10 yrs, and annual maintenance costs of $250. Annual taxes and insurance costs on either motor will be 1.5% of the investment. Assume that SV for both motors are negligible and that electricity costs $0.05/kw hr. Note: Electrical Eff If the MARR is 15%, how many hrs/yr would the motors have to be operated at full load for the annual costs to be equal?
1 answer:
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Answer:
a) $7,250
Explanation:
First, find the Earnings Before Interest and Taxes (EBIT):
Then, apply taxes to the EBIT:
Finally, Since depreciation is not an operating expense, add it to the earnings to find the operating cash flow (OCF):