Problem 1

An area can be irrigated by pumping water from a nearby river. Two competing installations are being considered. The MARR is 12% per year. At what level of operation (hours per year) would you be indifferent between the two pumping systems. The table below gives the different estimates needed to do the calculations.

	Pump A	Pump B
Initial cost , $	2410	4820
Electrical efficiency	60%	75%
Salvage value, $	80	0
Operating load on motor	15 hp	10 hp
Electric power costs , $ (1hp=0.746 kW)	0.06/kwh	0.06/kwh
Useful life, years	8	8

Problem 2

A public-private initiative in Texas will significantly expand the wind-generated energy through- out the state. The cash flow for one phase of the project involving Central Point Energy, a trans-mission utility company, is shown. Given reinvestment rate of 14% per year for excess funds and 10 % per year for borrowing rate for extra funds, determine: given MARR = 12%

Year	Net cash flow
0	-50000
1	+22000
2	+38000
3	-2000
4	-1000
5	+5000

How many number of ROR values is expected and why?

Calculate the external rate of return?

Is the project economically viable?