Use the present worth-annual cost and rate of return method

Assignment Help Business Economics

Reference no: EM131246052

An electrical energy audit indicates that the motor control center consumption is 8*10^6 kWh per year. By using high-efficiency motors a savings of 15 percent can be achieved. The additional cost for these motors is about $80,000. Assuming that the average energy charge is $0.08 per kWh, is the expentidure justified based on a minimum rate of return of 18 percent before taxes? Assume a 20-year life cycle and use the present worth, annual cost and rate of return methods.

Reference no: EM131246052

Questions Cloud

Monopolist price under third-degree price discrimination : Suppose there are two potential pools of customers for the gym. One group gets a high benefit from joining, but a smaller benefit from actually working out. Derive each consumer’s surplus before the fixed fee for a given variable price p. How will th..

Historic disparity between unemployment rates for black : The historic disparity between unemployment rates for Black, Hispanic, and White workers. Please explain 3 reasons the Black and Hispanic unemployment rates are always significantly higher than the unemployment rate for Whites.

Analysis of a company using data from its annual report : The Final Paper will involve applying the concepts learned in class to an analysis of a company using data from its annual report. Using the concepts from this course, you will analyze the strengths and weaknesses of the company and write a report..

Labeling them appropriately : A pair of lumberjacks can use a two-person saw to cut down 25 trees in a day. A single lumberjack using a two-person saw is unable to cut down any trees. Use the appropiate drawing tool to draw the isoquants for Q=50 trees per day and Q=100 trees per..

Use the present worth-annual cost and rate of return method : An electrical energy audit indicates that the motor control center consumption is 8*10^6 kWh per year. By using high-efficiency motors a savings of 15 percent can be achieved. The additional cost for these motors is about $80,000. Assume a 20-year li..

The price elasticity for rice is estimated : The price elasticity for rice is estimated to be – 0.4 and the income elasticity is 0.8. At a price of $0.40 per pound and a per capita income of $20,000, the demand for rice is 50 million tons per year. Is rice an inferior good, a necessity, or a lu..

What is cross elasticity of demand for pipes-pipe tobacco : Acme Tobacco is currently selling 5,000 pounds of pipe tobacco per year. Due to competitive pressures, the average price of a pipe declines from $15 to $12. As a result, the demand for Acme pipe tobacco increases to 6,000 pounds per year. What is the..

What is the point income elasticity at the initial values : The McNight Company is a major producer of steel. Management estimates that the demand for the company’s steel is given by the equation Qs = 5,000 – 1,000Ps + 0.1I + 100Pa where Qs is steel demand in thousands of tons per year, How much steel will be..

Energy audit of residential heating system reveals : An energy audit of a residential heating system reveals that the boiler-burner efficiency is only 60 percent. In addition, the energy audit showed that an electric water heater is used. The house uses 1,500 gallons of oil annually at a cost of $1.40 ..

User Account

All Pages