Your firm is thinking about investing $200,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $36,000 in year one and then increasing by $12,000 more each year thereafter. Relevant expenses will be $5,000 in year one and will increase by $2,500 per year until the end of the cell's five-year life. Salvage recovery at the end of year five is estimated to be $8,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 12% per year?
Your firm is thinking about investing $200,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $36,000 in year one and then increasing by $12,000 more each year thereafter. Relevant expenses will be $5,000 in year one and will increase by $2,500 per year until the end of the cell's five-year life. Salvage recovery at the end of year five is estimated to be $8,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 12% per year?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Your firm is thinking about investing $200,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $36,000 in year one and then increasing by $12,000 more each year thereafter. Relevant expenses will be $5,000 in year one and will increase by $2,500 per year until the end of the cell's five-year life. Salvage recovery at the end of year five is estimated to be $8,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 12% per year?
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