The organization you are employed by is investing in new machinery for their warehouse. The $1.2 million initial investment is made. In year 1, the annual maintenance expenditures are $42,000, and they rise by $3,000 annually after that. In the first year, the revenues are $118,000, and they rise by 6% annually. After the equipment's 12-year useful life, a $25,000 salvage value will be obtained. a) The rate of return company made during progress b) If the desired MARR is 5%, is this a good investment?
The organization you are employed by is investing in new machinery for their warehouse. The $1.2 million initial investment is made. In year 1, the annual maintenance expenditures are $42,000, and they rise by $3,000 annually after that. In the first year, the revenues are $118,000, and they rise by 6% annually. After the equipment's 12-year useful life, a $25,000 salvage value will be obtained. a) The rate of return company made during progress b) If the desired MARR is 5%, is this a good investment?
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 3P
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The organization you are employed by is investing in new machinery for their warehouse. The $1.2 million initial investment is made. In year 1, the annual maintenance expenditures are $42,000, and they rise by $3,000 annually after that. In the first year, the revenues are $118,000, and they rise by 6% annually. After the equipment's 12-year useful life, a $25,000 salvage value will be obtained.
a) The
b) If the desired MARR is 5%, is this a good investment?
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