The average monthly electric bill of a manufacturing plant is 2000 the production manager of the plant planned to increasethe power factor from an average of 70% to 90% by connecting four of 15 KVAR power condensers which can be procured at 1500 each and gain a monthly savings of 150 the installation cost is 500 annual maintenance cost is 200. Salvage value is 10% of its initial value for a life of 10 years. If interest is 10% compounded annually, how long will the power condensers pay for themselves
The average monthly electric bill of a manufacturing plant is 2000 the production manager of the plant planned to increasethe power factor from an average of 70% to 90% by connecting four of 15 KVAR power condensers which can be procured at 1500 each and gain a monthly savings of 150 the installation cost is 500 annual maintenance cost is 200. Salvage value is 10% of its initial value for a life of 10 years. If interest is 10% compounded annually, how long will the power condensers pay for themselves
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 3P
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The average monthly electric bill of a manufacturing plant is 2000 the production manager of the plant planned to increasethe power factor from an average of 70% to 90% by connecting four of 15 KVAR power condensers which can be procured at 1500 each and gain a monthly savings of 150 the installation cost is 500 annual maintenance cost is 200. Salvage value is 10% of its initial value for a life of 10 years. If interest is 10% compounded annually, how long will the power condensers pay for themselves?
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