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Which fan is the most economical

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Please help with the following problem.

Tenders received from manufacturers indicate that a fan priced at $170,000 will cost $220,000 per year to run, whilst a fan costing $265,000 will require $190,000 per year in operating costs. If the costing period is five years with an annual interest rate of 7%, determine which fan is the most economical.

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Solution Summary

The solution explains how to determine which fan is the most economical based on tenders received from manufacturers, fan costs and operating costs. Step by step calculations are given, along with explanations of the equations.

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Problem: Tenders received from manufacturers indicate that a fan priced at $170,000 will cost $220,000 per year to run, whilst a fan costing $265,000 will require $190,000 per year in operating costs. If the costing period is five years with an annual interest rate of 7%, determine which fan is the most economical.

Solution:

In order to find out which fan is more economical to run, we can compare the total cost of each fan. The ...

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