An electric motor is rated at 10 horsepower (HP) and costs $1000. Its full load efficiency is specified to be 80%. A newly designed high-efficiency motor of the same size has an efficiency of 95%, but costs $2000. It is estimated that the motors will operate at a rated 10 HP output for 1500 hours a year, and the cost of energy will be $0.10 per kilowatt-hour. Each motor is expected to have a 20-year life. At the end of 20 years, the first motor will have a salvage value of $100 and the second motor will have a salvage value of $250. Consider the MARR to be 10%. (Note: 1 HP = 0.7457 KW.)

(a) Use the NPW criterion to determine which motor should be installed.

(b) In (a), what if the motors operated 3000 hours a year instead of 1500 hours a year? Would the motor you chose in (a) still be the choice?