A 50-kilowatt gas turbine has an investment cost of $40,000. It costs another $14,000 for shipping, insurance,

Question:

A 50-kilowatt gas turbine has an investment cost of $40,000. It costs another $14,000 for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The operation and maintenance expense for this turbine is $450 per year. Additionally, the hourly fuel expense for running the turbine is $7.50 per hour, and the turbine is expected to operate 3,000 hours each year. The cost of dismantling and disposing of the turbine at the end of its 8-year life is $8,000.
a. If the is 15% per year, what is the annual equivalent life-cycle cost of the gas turbine?
b. What percent of annual life-cycle cost is related to fuel?
MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...