An international manufacturer of prepared food items needs 50,000,000 kWh of electrical energy a year, with a

Question:

An international manufacturer of prepared food items needs 50,000,000 kWh of electrical energy a year, with a maximum demand of 10,000 kW. The local utility company currently charges $0,085 per kWh-a rate considered high throughout the industry. Because the firm's power consumption is u large, its engineers are considering installing a 10,000-kW steam turbine plant. Three types of plant have been proposed (units in thousands of dollars) and are given in Table PI0.29.
The service life of each plant is expected to be 20 years. The plant investment will be subject to a 20-year MACRS property classification. The expect- of the plant at the end of its useful life is about 10% of its original investment. The firms is known to be 12%. The firm's marginal income tax rate is 39%.
Table PI0.29

(a) Determine the unit power cost ($/kWh) for each plant.
(b) Which plant would provide the most economical power?

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