Eng Economy Question 1 A standard electric motor is rated at 10 horsepower (HP) and costs $800. its full-load efficiency is specified to be 90%. A newly designed, high efficiency motor of the same size has an efficiency of 93%, but costs $1,200. It is estimated that the motors will operate at a rated 10-HP output for 2,000 hours a year, and the cost of energy will be $0.07 per kilowatt- hour. Each motor is expected to have 12-year life. At the end of 12 years, the first motor will have a salvage value of $50, and the second motor will have a salvage value of $100. Consider the Marr to be 8%. (Note:1hp = 0.7457 kw) What is the net present value (NPW) of the cash flow associated with the high efficiency motor?

a)-$1,123 b)-$9,522 c)-$1,160 d)-$9623