A 50-kilowatt gas turbine has an investment cost of $43,000. It costs another $1
ID: 2577842 • Letter: A
Question
A 50-kilowatt gas turbine has an investment cost of $43,000. It costs another $12,000 for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The operation and maintenance expense for this turbine is $400 per year. Additionally, the hourly fuel expense for running the turbine is $7.00 per hour, and the turbine is expected to operate 3,500 hours each year. The cost of dismantling and disposing of the turbine at the end of its 9-year life is $8,000 a. If the MARR is 18% 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?Explanation / Answer
Gar turbine Year Investment Cash flow Operation & Maintenance Cash flow Fuel expense cash flow dismantling cash flow Total of Cash flow PVIF@18% Present Value of Cash flow Present Value of Fuel expense 0 55000 55000 1.000000 55000.0 0 1 400 24500 24900 0.847458 21101.7 20762.71 2 400 24500 24900 0.718184 17882.8 17595.52 3 400 24500 24900 0.608631 15154.9 14911.46 4 400 24500 24900 0.515789 12843.1 12636.83 5 400 24500 24900 0.437109 10884.0 10709.18 6 400 24500 24900 0.370432 9223.7 9075.573 7 400 24500 24900 0.313925 7816.7 7691.163 8 400 24500 24900 0.266038 6624.4 6517.935 9 400 24500 8000 32900 0.225456 7417.5 5523.674 5.303022 163948.9 105424 The annual equivalent life cycle cost of the Gas Turbine =163948.9/5.303022 30916.127 The annual equivalent life cycle cost of the fuel =105424/4.303022 24499.991 % of annual life cycle cost related to fuel is =24500/30916.127% 79.25 %
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