ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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A​ special-purpose machine tool set would cost​ $20,000. The tool set will be financed by a​ $10,000 bank loan repayable in two equal annual installments at​ 10% compounded annually. The tool is expected to provide annual​ (material) savings of​ $30,000 for two years and is to be depreciated by the MACRS​ three-year recovery period. The tool will require annual
​O&M costs in the amount of​ $5,000. The salvage value at the end of the two years is expected to be​ $8,000. Assuming a marginal tax rate of​ 25% and MARR of​ 15%, what is the net present worth of this​ project?
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