The engineers in a manufacturing company have proposed an investment of a newconcrete batching plant to improve the quality of their products. The estimates areshown in Table 2. The minimum attractive rate of return (MARR) of the companyper year is 15%.Table 2: Estimates of New Concrete Batching PlantEstimatesInitial investment $250,000Salvage value $50,000Annual operating cost $35,000Annual revenues $90,000Study period 10 yearsa. Calculate the equivalent annual worth (AW) of the given investment.b. What annual revenue should be attained to reach breakeven. 6. The engineers in a manufacturing company have proposed an investment of a newconcrete batching plant to improve the quality of their products. The estimates areshown in Table 2. The minimum attractive rate of return (MARR) of the companyper year is 15%.7.Table 2: Estimates of New Concrete Batching PlantEstimatesInitial investmentSalvage valueAnnual operating cost$250,000$50,000$35,000$90,00010 yearsAnnual revenuesStudy perioda. Calculate the equivalent annual worth (AW) of the given investment.b. What annual revenue should be attained to reach breakeven.

The annual worth of the project is the annual distribution of the net present value over a period of…

Answered: 6. The engineers in a manufacturing…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

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The engineers in a manufacturing company have proposed an investment of a new
concrete batching plant to improve the quality of their products. The estimates are
shown in Table 2. The minimum attractive rate of return (MARR) of the company
per year is 15%.

Table 2: Estimates of New Concrete Batching Plant
Estimates
Initial investment $250,000
Salvage value $50,000
Annual operating cost $35,000
Annual revenues $90,000
Study period 10 years

a. Calculate the equivalent annual worth (AW) of the given investment.
b. What annual revenue should be attained to reach breakeven.

6. The engineers in a manufacturing company have proposed an investment of a new
concrete batching plant to improve the quality of their products. The estimates are
shown in Table 2. The minimum attractive rate of return (MARR) of the company
per year is 15%.
7.
Table 2: Estimates of New Concrete Batching Plant
Estimates
Initial investment
Salvage value
Annual operating cost
$250,000
$50,000
$35,000
$90,000
10 years
Annual revenues
Study period
a. Calculate the equivalent annual worth (AW) of the given investment.
b. What annual revenue should be attained to reach breakeven.

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