Question
4-91. An electronic device is available that will reduce this years labor costs by $8,000. The equipment is expected to last for 10 years. Labor
4-91. An electronic device is available that will reduce this years labor costs by $8,000. The equipment is expected to last for 10 years. Labor costs increase at a rate of 5% per year and the interest rate is 10% per year.(4.12)
a. What is the maximum amount that we could justify spending for the device? Draw a cash flow diagram to represent the situation.
b. What is the uniform annual equivalent value (A) of the labor costs over the eight-year period?
A very similar question was answered in the Chegg Textbook Solutions for Engineering Economy (16th edition) Chapter 4 Question 4-91, but I need a cash flow diagram to help visualize the situation.
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