An electrical energy audit indicates that the motor control center consumption is 8 x 10⁶ kWh per year. By using high-efficiency motors, a savings of 15 percent can be achieved. The additional cost for these motors is about $80,000. Assuming that the average energy charge is $0.08 per kWh, is the expenditure justified based on a minimum rate of return of 18 percent before taxes? Assume a 20-year life cycle and use the present worth, annual cost, and rate of return methods.

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Working notes Current annual energy charge 8 x 10 6 kWh x 008 per kWh 640000 Annual ene... View the full answer