Chap 5 examples

Chap 5 examples - Example 1 An investment of $10,000 can be...

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Example 1 An investment of $10,000 can be made in a project that will produce a uniform revenue of $5,310 for five years and then have a market (salvage) value of $2,000. Annual expenses will be $3,000 each year. The company is willing to accept any project that will earn 10% or more, on all invested capital. Show whether this is a desirable investment by using the PW method. Chap 5 examples
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A piece of new equipment has been proposed by engineers to increase the productivity of a certain manual welding operation. The investment cost is $25,000 and the equipment will have a market value of $5,000 at the end of a study period of five years. Increased productivity attributable to the equipment will amount to $8,000 per year after extra operating costs have been subtracted from the revenue generated by the additional production. If the firm’s MARR is 20% per year, is this proposal a sound one? Use the PW method. Chap 5 examples
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Chap 5 examples - Example 1 An investment of $10,000 can be...

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