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AUM American University Of The Middle East Problem 3 (25 points). An area can be irrigated by pumping water from a nearby river. Two competing installations are being considered. Pump A Pump B Operating load on motor 14hp 9hp Efficiency of pump motor 0.6 0.7 Cost of installation (USD) 2400 4800 Market value (USD) 80 10 Useful life 8 8 The MARR is 12% per year and electric power for the pumps costs $0.05 per k Wh. Recall that 1 horsepower (hp) equals 0.746 kilowatts. a. At what level of operation (hours per year) would you be indifferent between the two pumping systems? If the pumping system is expected to operate 2,000 hours per year, which system should be recommended? Explain your decision. (10 points) b. Perform a sensitivity analysis on the efficiency of Pump A. Over what range of pumping efficiency is Pump A preferred to Pump B? Assume 2,000 hours of operation per year. Explain your decision. (10 points) c. If sensitivity in terms of cost of installation for Pump B is 15% and sensitivity in terms of efficiency for the same Pump is 10%, which factor has the highest sensitivity in this case. Explain in your own words why. (5 points)

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