You are considering making an $80,000 investment in a process improvement project. Revenues are expected to grow from $50,000 in year 1 by $30,000 each year for next four years ($50,000 first year, $80,000 second year, $110,000 third year, and so forth) while costs are expected to increase from $20,000 in year 1 by $10,000 each year. If there is no salvage value at the end of five years, what is the annual equivalent worth of the project assuming an MARR of 12%?(a) $65,492(b) $53,300(c) $47,785(d) $43,300
You are considering making an $80,000 investment in a process improvement project. Revenues are expected to grow from $50,000 in year 1 by $30,000 each year for next four years ($50,000 first year, $80,000 second year, $110,000 third year, and so forth) while costs are expected to increase from $20,000 in year 1 by $10,000 each year. If there is no salvage value at the end of five years, what is the annual equivalent worth of the project assuming an MARR of 12%?(a) $65,492(b) $53,300(c) $47,785(d) $43,300
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 10E: Roberts Company is considering an investment in equipment that is capable of producing more...
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You are considering making an $80,000 investment in a process improvement project. Revenues are expected to grow from $50,000 in year 1 by $30,000 each year for next four years ($50,000 first year, $80,000 second year, $110,000 third year, and so forth) while costs are expected to increase from $20,000 in year 1 by $10,000 each year. If there is no salvage value at the end of five years, what is the annual equivalent worth of the project assuming an MARR of 12%?
(a) $65,492
(b) $53,300
(c) $47,785
(d) $43,300
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