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The Autocar E3 truck has an energy recovery system developed by Hannifin LLC that is expected to reduce fuel consumption by 50%
The Autocar E3 truck has an energy recovery system developed by Hannifin LLC that is expected to reduce fuel consumption by 50%. Pressurized fluid flows from carbon fiber-reinforced accumulator tanks to two hydrostatic motors that propel the vehicle forward. The truck recharges the accumulators when it brakes. The fuel cost for a regular refuse truck is $800 per month. How much can a private waste hauling company afford to spend on the recovery system, if it wants to recover its investment in 3 years at an interest rate of 12% per year?
Expert Solution
The formula used here for calculating the present worth is -
P = A [ ( 1- i )n -1 / i ( 1+ i)n ]
Here, A is annual payment
n is number of years
i is annual interest rate
In the given question, the compounding period is more than payment period. Therefore the payment period is made by multiplying the amount by frequency of payment period in compounding period. So amount is multiplied by 12 as there are 12 months in a year.
Calculation of present worth of system -
Saving per month = 800 × 50% = $400
Saving per year = 400 × 12 = $4800
P = 4800 ( P/A , 12% , 3)
P = 4800 ( 2.4018 )
P = $11528.64 .
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