The motor on a gas-fired furnace in a small foundry is to be replaced. Three different 15-horsepower electric motors are being considered. Motor X sells for $2,500 and has an efficiency rating of 90%; motor Y sells for $1,750 and has a rating of 85%; motor Z sells for $1,000 and is rated to be80% efficient. The cost of electricity is $0.065/kilowatt-hour. An 8-yearplanning horizon is used, and zero salvage values are assumed for all threemotors. A MARR of 12% is to be used. Assume that the motor selected will be loaded to capacity. Determine the range of values for annual usage of the motor (in hours) that will lead to the preference of each motor. (Note: 0.746 kilowatts = 1 horsepower.)
The motor on a gas-fired furnace in a small foundry is to be replaced. Three different 15-horsepower electric motors are being considered. Motor X sells for $2,500 and has an efficiency rating of 90%; motor Y sells for $1,750 and has a rating of 85%; motor Z sells for $1,000 and is rated to be80% efficient. The cost of electricity is $0.065/kilowatt-hour. An 8-yearplanning horizon is used, and zero salvage values are assumed for all threemotors. A MARR of 12% is to be used. Assume that the motor selected will be loaded to capacity. Determine the range of values for annual usage of the motor (in hours) that will lead to the preference of each motor. (Note: 0.746 kilowatts = 1 horsepower.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The motor on a gas-fired furnace in a small foundry is to be replaced. Three different 15-horsepower electric motors are being considered. Motor X sells for $2,500 and has an efficiency rating of 90%; motor Y sells for $1,750 and has a rating of 85%; motor Z sells for $1,000 and is rated to be
80% efficient. The cost of electricity is $0.065/kilowatt-hour. An 8-year
planning horizon is used, and zero salvage values are assumed for all three
motors. A MARR of 12% is to be used. Assume that the motor selected will be loaded to capacity. Determine the range of values for annual usage of the motor (in hours) that will lead to the preference of each motor. (Note: 0.746 kilowatts = 1 horsepower.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education