Additional Information for Problem 1:

Compressor A costs $2,100

Compressor B costs $1,500

Compressor C costs $1,750

1. A company is evaluating three air compressors to replace their existing 50 hp air compressor. The current compressor costs $50,000/yr to operate and is used continuously. The three options being evaluated are shown below. The company pays $6.50/kW-month and 8.7 cents/kwh in electricity costs. Compressor 1: Compressor 2: Compressor 3: 100 hp 50 hp 75 hp Efficiency=92% Efficiency =94.2% Efficiency=92% a: 100% load, 5000 hr/yr 100% load, 8760 hr/yr a: 100% load, 6500 hr/yr b: 50% load, continuously b: 75% load, continuously Compressors 1 and 3 can be used two different ways: a: Full load for less hours or b: partial load continuously. This results in 5 possible options for the company. a. Compute the annual energy costs for each of the five options. (Hint: each annual cost should be between $20k and $50k). b. Compute the simple payback period for each of the five options (Hint: SPP for each option is less than 0.5 year). c. Provide reasons to purchase each of the 5 options, these reasons do not need to be only cost related