an 80 kW electric set cost 160000. The cost index was 187 six years ago and is n
ID: 2649475 • Letter: A
Question
an 80 kW electric set cost 160000. The cost index was 187 six years ago and is now 194. The cost capacity factor is .6.
1) A 120kW unit of the same design is used. If we want to add a precompressor it costs 18000 (isolated and estimated separately). What is the total cost of the 120kW unit
2) What is the cost of a 40kW unit include the cost of 18000 precompressor
3) What is the total cost per kW for the 120-kW unit and the 40-kW unit? and What is the three word phrase that explains the difference between the unit costs?
Please include your reasoning I want to understand the question.
Explanation / Answer
Answer:
1) Cost of 80kw Set 6 years ago = 160000
Cost now = cost before 6 yearss * cost index now / cost index before
=160000*194/ 187 = 165989.30
Cost of 120 Kw today = 165989.30*120/80 = 248983.96
Add: precompressor cost 18000
Total cost of 120 Kw unit = 266983.96
2) Cost of 40 Kw today = 165989.30*40/80 = 82994.65
Add: precompressor cost 18000
Total cost of 40 Kw unit = 100994.65
3) Total cost per kW = Total cost / Kw * capacity factor
Total cost per kW for the 120-kW unit = 266983.96 / (120 *0.6) = 3708.11
Total cost per kW for the 40-kW unit = 100994.65 / (40 *0.6) = 4208.11
The three word phrase that explains the difference between the unit costs is LEVEL OF ACTIVITY.
Bcauase the unit cost increases when the level of Kw decreases.
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