Question: Extended Learning Exercise There are two customers requiring three-phase electrical service, one existing at location A and a new customer at location B. The load at location A is known to be 110 kVA, and at location B it is contracted to be 280 kVA. Both loads are expected to remain constant indefinitely into the future. Already in service at A are three 100-kVA transformers that were installed some years ago when the load was much greater. Thus, the alternatives are as follows: Alternative A: Install three 100-kVA transformers (new) B now and replace those at A with three 37.5-kVA transformers only when the existing ones must be retired. Alternative B: Remove the three 100-kVA transformers now at A and relocate them to B. Then install three 37.5-kVA transformers (new) at A.
Data for both alternatives are provided in Table. The existing transformers have 10 years of life remaining. Suppose that the before-tax MARR = 8% per year. Recommend which action to follow after calculating an appropriate criterion for comparing these alternatives. List all assumptions necessary and ignore income taxes.