A special-purpose 30-horsepower electric motor has an efficiency of 90%. Its purchase and installation price is $2,200.

Question:

A special-purpose 30-horsepower electric motor has an efficiency of 90%. Its purchase and installation price is $2,200. A second 30-horsepower high-efficiency motor can be purchased for $3,200, and its efficiency is 93%. Either motor will be operated 4,000 hours per year at full load, and electricity costs $0.10 per kilowatt-hour (kWh). = 15% per year, and neither motor will have a market value at the end of the eight-year study period.
a. Which motor should be chosen?
b. For an incremental investment of $1,000 in the more efficient motor, what is the PW of the energy savings over the eight-year period?
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...