Extended Learning Exercise There are two customers requiring three-phase electrical ser-j vice, one existing at location A and a new customer at location B. The load at location A is known to be 1110 kVA, and at location B it is contracted to be 280 kVA. Both loads are expected to remain constant indefinitely into the future. Already in service at A are three 100-kVA transformers that were installed some years ago when the load was much greater. Thus, the alternatives are as follows:
Alternative A: Install three 100-kVA transformers (new) B now and replace those at A with three 37.5-kVA transformers only when the existing ones must be retired.
Alternative B: Remove the three 100-kVA trans-formers now at A and relocate them to B. Then install three 37.5-kVA transformers (new) at A.

Data for both alternatives are provided in Table P9-25. The existing transformers have 10 years of life remaining. Suppose that the before-tax MARR = 8% per year. Recommend which action to follow after calculating an appropriate criterion for comparing these alternatives. List all assumptions necessary and ignore income taxes.

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TABLE P9-2 5 Table for Problem 9-25 Existing and New Transformers Three 37.5-kVA Three 100-kVA Capital Investment: Equipment Installation Property tas Removal cost Market value $900 5340 2% of capital investment $100 S100 $2,100 $475 2% of capital investment $110 $110 Useful life (years) 30 30