A construction company is considering purchasing a water pump to be used in dewatering a deep foundation cut. The Specific Electric Company sells two pumps in the 100-HP range. Model A-38 costs $2,400 and has a full load efficiency of 91%. Model A-40 costs $2,000 and has a full load efficiency of 89.5%. The construction company's excavation operation requires one 100-HP pump to operate a full load for 1,800 hours per year. Energy costs 2 cents a kilowatt-hour. (0.746 KW = 1 HP, and kilowatt-hours equals the number of kilowatts input times the number of hours of operation). These pumps are expected to serve 12 years and have 25% salvage value. If they are equal mechanically in all respects except efficiency, what selection should be made based on a rate-of-return analysis? Take MARR=12%.
3. A construction company is considering purchasing a water pump to be used in dewatering a deep foundation cut. The Specific Electric Company sells two pumps in the 100-HP range. Model A-38 costs $2,400 and has a full load efficiency of 91%. Model A-40 costs $2,000 and has a full load efficiency of 89.5%. The construction company's excavation operation requires one 100-HP pump to operate a full load for 1,800 hours per year. Energy costs 2 cents a kilowatt-hour. (0.746 KW = 1 HP, and kilowatt-hours equals the number of kilowatts input times the number of hours of operation). These pumps are expected to serve 12 years and have 25% salvage value. If they are equal mechanically in all respects except efficiency, what selection should be made based on a rate-of-return analysis? Take MARR=12%.
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