Your firm is thinking about investing $200,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $36,000 in year one and then increasing by $12,000 more each year thereafter. Relevant expenses will be $5,000 in year one and will increase by $2,500 per year until the end of the cell's five-year life. Salvage recovery at the end of year five is estimated to be $8,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 12% per year?
Your firm is thinking about investing $200,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $36,000 in year one and then increasing by $12,000 more each year thereafter. Relevant expenses will be $5,000 in year one and will increase by $2,500 per year until the end of the cell's five-year life. Salvage recovery at the end of year five is estimated to be $8,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 12% per year?
Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance
Section: Chapter Questions
Problem 4.8P
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Question
Your firm is thinking about investing $200,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $36,000 in year one and then increasing by $12,000 more each year thereafter. Relevant expenses will be $5,000 in year one and will increase by $2,500 per year until the end of the cell's five-year life. Salvage recovery at the end of year five is estimated to be $8,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 12% per year?
![More Info
Discrete Compounding; i= 12%
Single Payment
Uniform Series
Uniform Gradient
Gradient
Compound
Amount
Present
Compound
Amount
Present
Sinking
Fund
Capital
Recovery
Factor
To Find A
Gradient
Uniform
Worth
Worth
Present
Series
Factor
Factor
Factor
Factor
Factor
Worth Factor
Factor
To Find P To Find A
Given G
P/G
To Find F
To Find P
To Find F
To Find P
To Find A
Given F
P/F
Given P
Given A
Given A
Given F
Given P
Given G
F/P
FIA
P/A
A/F
A/P
A/G
1
1.1200
0.8929
1.0000
0.8929
1.0000
1.1200
0.0000
0.0000
2
1.2544
0.7972
2.1200
1.6901
2.4018
0.4717
0.5917
0.7972
0.4717
3
1.4049
0.7118
3.3744
0.2963
0.4163
2.2208
0.9246
4
1.5735
0.6355
4.7793
6.3528
8.1152
3.0373
0.2092
0.3292
4.1273
1.3589
1.7623
0.5674
3.6048
0.1574
0.2774
6.3970
1.7746
6
1.9738
0.5066
4.1114
0.1232
0.2432
8.9302
2.1720
7
2.2107
0.4523
10.0890
4.5638
0.0991
0.2191
11.6443
14.4714
2.5515
8
2.4760
0.4039
12.2997
4.9676
0.0813
0.2013
2.9131
9
2.7731
5.3282
0.3606
0.3220
14.7757
0.0677
0.1877
17.3563
3.2574
10
3.1058
17.5487
5.6502
0.0570
0.1770
20.2541
3.5847
Print
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Transcribed Image Text:More Info
Discrete Compounding; i= 12%
Single Payment
Uniform Series
Uniform Gradient
Gradient
Compound
Amount
Present
Compound
Amount
Present
Sinking
Fund
Capital
Recovery
Factor
To Find A
Gradient
Uniform
Worth
Worth
Present
Series
Factor
Factor
Factor
Factor
Factor
Worth Factor
Factor
To Find P To Find A
Given G
P/G
To Find F
To Find P
To Find F
To Find P
To Find A
Given F
P/F
Given P
Given A
Given A
Given F
Given P
Given G
F/P
FIA
P/A
A/F
A/P
A/G
1
1.1200
0.8929
1.0000
0.8929
1.0000
1.1200
0.0000
0.0000
2
1.2544
0.7972
2.1200
1.6901
2.4018
0.4717
0.5917
0.7972
0.4717
3
1.4049
0.7118
3.3744
0.2963
0.4163
2.2208
0.9246
4
1.5735
0.6355
4.7793
6.3528
8.1152
3.0373
0.2092
0.3292
4.1273
1.3589
1.7623
0.5674
3.6048
0.1574
0.2774
6.3970
1.7746
6
1.9738
0.5066
4.1114
0.1232
0.2432
8.9302
2.1720
7
2.2107
0.4523
10.0890
4.5638
0.0991
0.2191
11.6443
14.4714
2.5515
8
2.4760
0.4039
12.2997
4.9676
0.0813
0.2013
2.9131
9
2.7731
5.3282
0.3606
0.3220
14.7757
0.0677
0.1877
17.3563
3.2574
10
3.1058
17.5487
5.6502
0.0570
0.1770
20.2541
3.5847
Print
Done
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