Question 3 There are 2 alternative electric motors with similar output that your company is considering to purchase: Motor A has a power consumption of 100 kilowatts (kW), costs $12,500, has a useful life of 10 years and maintenance expenses of $500 per year. There is negligible salvage value at the end of 10 years. Motor B has a power consumption of 80 kW, costs $16,000, has a useful life of 10 years and maintenance expenses of $250 per year. Salvage value is also negligible at the end of 10 years. The required MARR is 15% per year. Electricity to operate both motors costs $0.05 per kW per hour. Assume that the revenues are equal for both motors so that only the costs are assessed. Using breakeven analysis and EUAC, solve for the number of hours per year that the motors have to be operated for the annual costs to be equal. (15 marks) (b) A government is assessing the cost of a canal project. The initial investment will cost $4 million and is assessed to have an infinite life. Annual maintenance cost is $5,000 starting one year from now. Weeds will also have to be removed every 5 years at a cost of $30,000, with the first such weed removal procedure to be conducted 5 years from now. Using an interest rate of 5% per annum, calculate the EUAC of the project. (10 marks) Question 3 There are 2 alternative electric motors with similar output that your company is considering to purchase: Motor A has a power consumption of 100 kilowatts (kW), costs $12,500, has a useful life of 10 years and maintenance expenses of $500 per year. There is negligible salvage value at the end of 10 years. Motor B has a power consumption of 80 kW, costs $16,000, has a useful life of 10 years and maintenance expenses of $250 per year. Salvage value is also negligible at the end of 10 years. The required MARR is 15% per year. Electricity to operate both motors costs $0.05 per kW per hour. Assume that the revenues are equal for both motors so that only the costs are assessed. Using breakeven analysis and EUAC, solve for the number of hours per year that the motors have to be operated for the annual costs to be equal. (15 marks) (b) A government is assessing the cost of a canal project. The initial investment will cost $4 million and is assessed to have an infinite life. Annual maintenance cost is $5,000 starting one year from now. Weeds will also have to be removed every 5 years at a cost of $30,000, with the first such weed removal procedure to be conducted 5 years from now. Using an interest rate of 5% per annum, calculate the EUAC of the project. (10 marks)