Business, 16.10.2020 18:01 kiki1718

A 50-kilowatt gas turbine has an investment cost of $40,000. It costs another $14,000 for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The operation and maintenance expense for this turbine is $450 per year. Additionally, the hourly fuel expense for running the turbine is $7.50 per hour, and the turbine is expected to operate 3,000 hours each year. The cost of dismantling and disposing of the turbine at the end of its 8-year life is $8,000. Required:
a. If the MARR is 15% per year, what is the annual equivalent life-cycle cost of the gas turbine?
b. What percent of annual life-cycle cost is related to fuel?

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Answer from: hamada11617

The annual equivalent life-cycle cost (AW) of gas turbine = -$35,569.8

The percentage fuel cost = 63.25%

Explanation:

From the given information:

Let's start with the initial investment cost, which can be expressed by using the formula:

Initial investment cost = Investment cost of turbine + cost including shipping, insurance, site preparation, fuel lines, and fuel storage tanks.)

Initial investment cost = $40,000 + $14000

Initial investment cost = $54000

However, The annual fuel expense = hourly fuel expense for running turbine × total number of operating hour per year

The annual fuel expense = $7.50 × 3000

The annual fuel expense = $22,500

Therefore, the total operating cost per year = operating & maintenance cost per year + fuel expenses per year

the total operating cost per year = $(450 + 22500)

the total operating cost per year = $22,950

If the minimum acceptable rate of return MARR is 15%, then the number of years is 8 years

Therefore, the annual equivalent life-cycle cost (AC) of the gas turbine can be computed as follows:

AC(15%) = -54000 (A/P, 15%, 8) - $22950-$8000(A/F,15%,8)

where;

(A/P,15%,8) = annual worth factor of a present worth

(A/F,15%,8) = annual worth factor of future worth for 8 years and 15% interest rate.

If we use the discrete compounding table when i = 15%;

Value of (A/P,15%,8) = 0.229

Value of (A/F,15%,8) = 0.0729

∴

AC(15%) = -$54,000(0.2229) - $22,950 -$8000(0.0729)

AC(15%) = -$12,036.6 -$22950 -$583.2

AC(15%) = -$35,569.8

Therefore, the annual equivalent life-cycle cost (AW) of gas turbine = -$35,569.8

The percentage of the annual life-cycle cost related to the fuel can be calculated by using the formula :

$\mathbf{\% \ fuel \ cost = \dfrac{fuel \ cost \ per \ year}{total \ annual \ life \ cycle \ cost }\times 100\%}$

Replacing our values from above, we have:

$\mathbf{\% \ fuel \ cost = \dfrac{\$22500}{\$35,569.8}\times 100\%}$

$\mathbf{\% \ fuel \ cost = 0.6325\times 100\%}$

∴

The percentage fuel cost = 63.25%

Answer from: Quest

answer; im thinking the correct answer is (7years);

Answer from: Quest

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

$capital * (1+0.045)^{28} = 48,613.24$

now clearing the formula to solve for capital we got:

$capital = \frac{48,613.24}{(1+0.045)^{28}}$

and we reach the answer investment = $14,174.20

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