A portable generator is needed at a remote construction site. Two alternatives are being considered. Their annual fixed costs and operating and maintenance costs per hour are shown in the table below. The contractor runs three 8-hour shifts per day for 250 working days per year.

GeneratorFixed Costs ($/yr)O&M Costs ($/hour)
1$4,000$7.00
2$8,000$5.50

Determine the breakeven value in generator hours per shift for the contractor to be indifferent between the two portable generators.

XXXX hours?

If the site requires a generator for 2.5 hours per shift, which generator is preferred, and what is its estimated annual cost?

Generator 1 or 2?

Estimated annual cost for preferred?

If the site requires a generator for 5.5 hours per shift, which generator is preferred, and what is its estimated annual cost?

Generator 1 or 2?

Estimated annual cost for preferred?

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