- 12 A Recapping Plant Is Planning To Acquire A New Diesel Engine Set To Replace Its Present Unit Which They Run During P 1 (224.26 KiB) Viewed 43 times
12. A recapping plant is planning to acquire a new diesel engine set to replace its present unit which they run during p
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12. A recapping plant is planning to acquire a new diesel engine set to replace its present unit which they run during p
12. A recapping plant is planning to acquire a new diesel engine set to replace its present unit which they run during power interruptions. The new diesel set would cost $135,000 with a five years life and zero residual value. Annual operating cost would be $150,000. On the other hand, the present generating set has a remaining life of 5 years. Its present value is $7,500 but has zero residual value after 5 years. Annual operating costs is placed at $187,500. If MARR=10%, which is more profitable - to buy the new generator set or retain the present set? Calculate the difference in annual costs between the two alternatives.
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