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A firm that purchases electricity from the local utility is considering installing a steam generator. A large generator costs $ 3 2 0 , 0
A firm that purchases electricity from the local utility is considering installing a steam generator. A large generator costs $ whereas a small generator costs $ The cost of operating the generator would be $ per year for the large and $ for the small. Either generator will last for five years. The cost of capital is
For each generator option, assume immediate installation, with purchase and operating costs in the current year and operating costs continuing for the next four years. Assume payments under both options at the start of each year ie immediate, one year from now,..., four years from now
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