Instructions: Solve each problem COMPLETELY and NEATLY. Show the necessary cashflow diagrams for each problem and box final answer. 
1. ABC Company is planning to enter in the energy industry by creating a small pump-storage plant which has an effective head of 75m and is expected to provide a maximum of 500kW. - In the morning, the rate of exchange of electricity in energy trading costs P6/kWhr while in the evening electricity costs about P2/kWhr. The pump storage plant produces energy for 8hrs in the morning at maximum capacity then sells it to the energy market. In the evening, when electricity costs cheaper, the plant buys energy and pumps back the same volume of water used in the morning in preparation for tomorrow. Both Pump and Turbine have an efficiency of 85% If annual revenue is estimated at 360 days per year operation, Compute whether if the venture is economically sound or not. Initial investment needed is 23 million pesos and is expected to return the investment in 10 years. MARR is 15% Hint: 1. Compute for the daily revenue from the plant capacity and hours of operation 2. Compute the total of volume water used in the morning - this will be the volume of water to be pumped in the evening. 3. Compute for the total energy used in the evening as well as the cost of daily pumping 4. Obtain the daily net revenue then the annual revenue by multiplying the daily net revenue with the days of operation per year 5. Compute for the economic viability thru PW or AW or ROR method 2. A building engineer is trying to find solutions for the reduction of operation of their 25kw pump operating at 10hrs/day, 365 days/year The first alternative is to buy a VFD for their 25kw pump. The pump originally operates at 3000RPM, the VFD will reduce this to 2700RPM as to save energy while maintaining operation above the minimum capacity and head requirements. The VFD costs 50,000 and the pump will have an annual maintenance of P70,000 The second alternative is to replace the old one with a new one with a smaller pump which will operate at 18kW and has an annual maintenance of 40,000. The new pump will cost 350,000 If electricity costs P10/kWhr, which is the better option? MARR is 10%. Life considered for both options is 15 years. 1. ABC Company is planning to enter in the energy industry by creating a small pump-storage plant which has an effective head of 75m and is expected to provide a maximum of 500kW. - In the morning, the rate of exchange of electricity in energy trading costs P6/kWhr while in the evening electricity costs about P2/kWhr. The pump storage plant produces energy for 8hrs in the morning at maximum capacity then sells it to the energy market. In the evening, when electricity costs cheaper, the plant buys energy and pumps back the same volume of water used in the morning in preparation for tomorrow. Both Pump and Turbine have an efficiency of 85% If annual revenue is estimated at 360 days per year operation, Compute whether if the venture is economically sound or not. Initial investment needed is 23 million pesos and is expected to return the investment in 10 years. MARR is 15% Hint: 1. Compute for the daily revenue from the plant capacity and hours of operation 2. Compute the total of volume water used in the morning - this will be the volume of water to be pumped in the evening. 3. Compute for the total energy used in the evening as well as the cost of daily pumping 4. Obtain the daily net revenue then the annual revenue by multiplying the daily net revenue with the days of operation per year 5. Compute for the economic viability thru PW or AW or ROR method 2. A building engineer is trying to find solutions for the reduction of operation of their 25kw pump operating at 10hrs/day, 365 days/year The first alternative is to buy a VFD for their 25kw pump. The pump originally operates at 3000RPM, the VFD will reduce this to 2700RPM as to save energy while maintaining operation above the minimum capacity and head requirements. The VFD costs 50,000 and the pump will have an annual maintenance of P70,000 The second alternative is to replace the old one with a new one with a smaller pump which will operate at 18kW and has an annual maintenance of 40,000. The new pump will cost 350,000 If electricity costs P10/kWhr, which is the better option? MARR is 10%. Life considered for both options is 15 years
