A piece of research equipment is expected to require an investment of $18,000, with $6,000 committed now and next year $7000 while the remaining $6K will be pay out at the end of year 2. Annual operating costs for the system are expected to start in the first year and continue at $800 per year. The life of the equipment is 8 years with a salvage value of $500. Calculate the CR and AW values for the system, if the corporate MARR is 14.32% per year. Explain the results of CR and AW.

A piece of research equipment is expected to require an investment of $18,000, with $6,000 committed now and next year $7000 while the remaining $6K will be pay out at the end of year 2. Annual operating costs for the system are expected to start in the first year and continue at $800 per year. The life of the equipment is 8 years with a salvage value of $500. Calculate the CR and AW values for the system, if the corporate MARR is 14.32% per year. Explain the results of CR and AW.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 4CE: Manzer Enterprises is considering two independent investments: A new automated materials handling...

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