Reference no: EM132838667

An energy-efficient air compressor is proposed by a vendor. The compressor will cost $30,000 installed, and will require $1,000 worth of maintenance each year for its life of 10 years. The energy cost will be $6,000 per year. A standard air compressor will cost $25,000 and will require $500 worth of maintenance each year. Its energy cost will be $10,000 per year. If your company uses a MARR of 10%, would you invest in the energy-efficient air compressor?

• Compare the economics of the two options by calculating their Life Cycle Cost (LCC).
• Discuss the benefits and limitations with each financial metric and why different businesses and organizations may prefer one metric over another to analyze the same efficiency project? Remember that different businesses may have different investment motivations.