Advanced Refrigerant bottles air conditioning refrigeratn. The company is interested in upgrading its manufacturing line. The upgrade would have a first cost of $125,000. Annual expenses are estimated to be $25,000 which will increase by 7% each subsequent year. The benefit from the upgrade is estimated to be $100,000 per year in years 1 through 3 and then $125,000 per year in years 4 through 8.

a. Using a MARR of 8%, what is the present worth of the upgrade to the manufacturing line?

b. Using a MARR of 8%, what is the equivalent uniform annual worth of the upgrade?

c. What is the payback period for the manufacturing upgrade?

d. What is the internal rate of return (IRR) of the cash flow?

Tip: Count the years carefully when calculating the benefit