Answer:

Given information:

Table-1 shows the investment and revenue generated for 4 different projects.

Table-1 • Interest rate is 10 %.

• Time period (n) is 5 years.

Annual equivalent value of project A:

Annual equivalent value can be calculated by using the following formula: …… (1)Where,

i = interest

n = time period

AV = annual equivalent value = cash flow in i th year

Substitute the respective values in Equation (1) to calculate the annual equivalent value of project a. The annual equivalent value of project A is . Since the annual equivalent value is negative the project is not acceptable.

Annual equivalent value of project B:

Substitute the respective values in Equation (1) to calculate the annual equivalent value of project b. The annual equivalent value of project B is . Since the annual equivalent value is negative the project is not acceptable.

Annual equivalent value of project C:

Substitute the respective values in Equation (1) to calculate the annual equivalent value of project c. The annual equivalent value of project C is . Since the annual equivalent value is positive the project is acceptable.

Annual equivalent value of project D:

Substitute the respective values in Equation (1) to calculate the annual equivalent value of project d. The annual equivalent value of project D is . Since the annual equivalent value is positive the project is acceptable.

Answer:

Given information:

• Initial cost is $120,000.

• Annual energy savings is $45,000.

• Annual energy saving increases by 5 percent per year.

• Operating hour per year is 5,000.

• Salvage value is $20,000.

• Time period is 10 years.

• Interest rate is ( i ) 10 percent.

Net annual savings:

Net annual savings can be calculated by using the following formula: …… (1)Where,

i = Interest rate

n = Time period

Substitute the respective values in Equation (1) to calculate the net annual savings. Hence, net annual savings is .

Savings per operating hour:

Savings per operating hour can be calculated by dividing the net annual savings by the annual operating hour as shown below: Savings per operating hour is . Hence, option (b) is the correct answer.

Answer:

Given information:

• Price of 30 horse power motor is $10,000.

• Efficiency of the motor is 89 percent.

• Expected salvage value is $1,000.

• Revenue increases by $30,000 each year.

• Cost is $0.09 per kilowatt hour.

• Run time is 2,000 hours per year.

• Time period is 10 years.

• Interest rate is 12 percent.

Total equivalent value:

Total equivalent value can be calculated by using the following formula: …… (1)Where,

i = Interest rate

n = Time period

Substitute the respective values in Equation (1) to calculate the annual equivalent value. Total equivalent value is . Hence, option (a) is the correct answer.