In: Economics
A 50-kilowatt gas turbine has an investment cost of $44,000. It costs another $13,000 for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The operation and maintenance expense for this turbine is $450 per year. Additionally, the hourly fuel expense for running the turbine is $7.75 per hour, and the turbine is expected to operate 3,400 hours each year. The cost of dismantling and disposing of the turbine at the end of its 9-year life is $8,000.
a. If the MARR is 13% per year, what is the annual equivalent life-cycle cost of the gas turbine?
b. What percent of annual life-cycle cost is related to fuel?