Combined cost index and power sizing model: If a 5 HP motor costs $500 five years...
Combined cost index and power sizing model:
If a 5 HP motor costs $500 five years ago, estimate the cost of a 25 HP motor today.
Homework Answers
Solution:
Today's cost = (Cost 5 years ago) (Index value today / Index value 5 years ago).
Thus we need to assume appropriate power-sizing exponent for such type of equipment is 0.8, thus the ratio of the cost indexes (current to 5 years ago) is 1.24.
500 * 1.24 = 620
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Combined cost index and power sizing model:
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