You are an electrical engineer for a company that makes transformers. You need to buy a new electric motor for the ventilation fan for an important chemical process in the plant. You are choosing between two 20 Kilowatt motors. Motor 1 costs $8,000 and runs at 92% efficiency. Motor 2 costs $5,000 and run as 87% efficiency. Electricity cost $.11 per kilowatt-hour. You would run each motor for 4,000 hours per year.
Your study period is 6 years and your MARR = 20%. Based on the annual worth (AW) method of study, which motor should you buy and buy how much?