Question: A 50-kilowatt gas turbine has an investment cost of $45,000. It costs another $11,000 for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The operation and maintenance expense for this turbine is $550 per year. Additionally, the hourly fuel expense for running the turbine is $7.50 per hour, and the turbine is expected to operate 2, 600 hours each year. The cost of dismantling and disposing of the turbine at the end of its 9-year life is $8, 500.
a. If the MARR is 12% 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?