The AAA Company uses a 8-hp motor 12 hours per day, 5 days per week, 50 weeks per year in its flexible work cell. The company is considering buying a new high efficiency motor (89.0% efficient) to replace the old one instead of buying a standard efficiency motor (84.0 % efficient). The high efficiency motor costs $78 more than the standard model, and should have a 15 year life. The company pays $ 6.50/kW per month and $0.07/kWh. The company has set a discount rate of 10% for their use in comparing projects.
Determine;
a) SPP ( simple Payback Period),
b) IRR (Internal Rate of Return), and
c) BCR (benefit/cost ratio) for this project
Assume 60% load factor the motor.