Civil Engineering Exams (Civil Math) – Flashcard Mode

A company let a contract for a group of 50 hp. motors. The contract provides that the motors shall have an efficiency of 92% and are to cost the company P430 each. After the motors are completed, test show that they have an efficiency of only 91%. The contractor agrees to sell them thru the company for P370 each. Each motor will have a life of 12 years with no salvage value at that time and all annual operational costs except that for electrical energy, will be the same for both motors. At what interest rate is this offer exactly equivalent to the original contract, provided that each motor will be 'operated 1000 hrs. a year with energy costing 1.5 centavos per kw/hr. One horsepower is equal to 0.746 kw/hr.