1. Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fi nes of $18,500 per year. An emission reduction fi lter will cost $75,000 and have an expected life of 5 years. Carlisle’s MARR is 10 percent/year.

a. What is the annual worth of this investment?

b. What is the decision rule for judging the attractiveness of investments based on annual worth?

c. Is the fi lter economically justifi ed?