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A food processing plant consumes 600,000 kW-hr of electrical energy annually and pays an average of P 2.00 per kW-hr. A study is being made

A food processing plant consumes 600,000 kW-hr of electrical energy

annually and pays an average of P 2.00 per kW-hr. A study is being made to

generate its own power to supply the plant the energy required. The power

plant installed, costs P 2,000,000; annual operation and maintenance, P 800,

000; other expenses, P 100,000 per year. The life of the plant is 15 years;

salvage value at the end of life is P 200,000; annual taxes and insurance 6%

of first cost, and the rate of interest is 15 %. Using the sinking fund method

for depreciation, determine the ROR of the power plant.

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