Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs $30.000. It has an expected life of 7 years at which time its salvage value will be $9.500. Operating and maintenance expenses are estimated to be $2.000 per year. If the filtration system is not purchased, Aerotron Electronics will have to pay Bay City $11.500 per year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must borrow 1/2 of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to 3 equal annual payments, with the 1st payment due at the end of year 2. The loan interest rate is 9.5 % compounded annually. Aerotron Electronics' MARR is 11.5% compounded annually. Part a What is the present worth of this investment? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 10.

Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs $30.000. It has an expected life of 7 years at which time its salvage value will be $9.500. Operating and maintenance expenses are estimated to be $2.000 per year. If the filtration system is not purchased, Aerotron Electronics will have to pay Bay City $11.500 per year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must borrow 1/2 of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to 3 equal annual payments, with the 1st payment due at the end of year 2. The loan interest rate is 9.5 % compounded annually. Aerotron Electronics' MARR is 11.5% compounded annually. Part a What is the present worth of this investment? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 10.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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