Question
Duquesne Light Company uses a 50-kilowatt gas turbine that costs US$40,000.00 to manufacture. It costs another US$14,000.00 for shipping, insurance, site preparation, fuel lines, and
Duquesne Light Company uses a 50-kilowatt gas turbine that costs US$40,000.00 to manufacture. It costs another US$14,000.00 for shipping, insurance, site preparation, fuel lines, and fuel storage tanks.
Operations and maintenance expenses for the turbine is US$450.00 per year. Hourly fuel expenses for operating the turbine is US$7.50, and the turbine will operate for 3,000 hours per year.
The cost for dismantling and disposing of the turbine at the end of its 8-year operating life is US$8,000.00.
If the Marginal Attractive Rate of Return (MARR) is 15% per year, what is the annual equivalent life-cycle cost of the gas turbine?
What percent of annual life-cycle cost is attributed to fuel?
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