The purchase of a motor for $6000 and a generator for $4000 will allow a company to produce its own energy. The configuration can be assembled for $500. The service will operate for 1600 hours per year for 10 years. The maintenance cost is $300 per year and the cost to operate is $0.85 per hour for fuel and related costs. Using straight line depreciation, what is the annual cost for the operation? There is $400 in salvage value for the system at the end of 10 years.

Answer: $2,670.00

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