Determine the cost-effectiveness of selecting a unit with an efficiency of 99.95 percent rather than 99.90 percent for a 500-kVA rated transformer. Assume that:

• The cost of electricity is $0.10/kWh.

• The installed costs of 99.0 percent and 99.5 percent efficient transformers are, respectively, $7,000 and $9,000.

• The average power factor of the load is 0.90 .

• The no-load losses are the same for both transformers.

For the analysis consider two cases for the length of time during which the transformer is used at its rated capacity:

a. 10 hours/day and 250 days/year

b. 16 hours/day and 300 days/year