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A manufacturing firm is buying power from MERALCO at an average cost of P1.60 per kWh. The company's average consumption is 36 million kWh per year. In view of the expected power shortage next year 2022, the company is considering generating its own power requirements. The president of the company wanted to know the comparative cost between self-generated power and that of MERALCO. If you are the engineer, how much is the rate of return in the self-generated power if the interest rate is 16%. The following technical information was obtained by the company's engineering department: Total connected load - 3,000 kW and peak load - 2,000 kW Based on the total connected load and beak load, three 1.5 Megawatt bunker-fired diesel Genset will be installed The first cost for the three Genset including civil works and building is P12,000 per kW The life of the whole power plant is 15 years Salvage value - 10% of the first cost Annual fuel and lubrication oil consumption and cost of petroleum products: Diesel fuel, for start-up -972.000 liters at P3.3916 per liter, Bunker C fuel 8.748 million liters at P2.3241 per liter, Lube oil - 10.000 liters at P21.56 liter The annual cost for spare parts and other consumables - P3.6 million Annual salaries/ wages for operating and maintenance personnel - P1.2 million Taxes and insurance - 1 percent of the first cost A manufacturing firm is buying power from MERALCO at an average cost of P1.60 per kWh. The company's average consumption is 36 million kWh per year. In view of the expected power shortage next year 2022, the company is considering generating its own power requirements. The president of the company wanted to know the comparative cost between self-generated power and that of MERALCO. If you are the engineer, how much is the rate of return in the self-generated power if the interest rate is 16%. The following technical information was obtained by the company's engineering department: Total connected load - 3,000 kW and peak load - 2,000 kW Based on the total connected load and beak load, three 1.5 Megawatt bunker-fired diesel Genset will be installed The first cost for the three Genset including civil works and building is P12,000 per kW The life of the whole power plant is 15 years Salvage value - 10% of the first cost Annual fuel and lubrication oil consumption and cost of petroleum products: Diesel fuel, for start-up -972.000 liters at P3.3916 per liter, Bunker C fuel 8.748 million liters at P2.3241 per liter, Lube oil - 10.000 liters at P21.56 liter The annual cost for spare parts and other consumables - P3.6 million Annual salaries/ wages for operating and maintenance personnel - P1.2 million Taxes and insurance - 1 percent of the first cost

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