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ars and then 7. A new milling machine will cost $50,000 to purchase and install in a carpet manufacturing plant. Revenues are expected to be
ars and then 7. A new milling machine will cost $50,000 to purchase and install in a carpet manufacturing plant. Revenues are expected to be $4000 per year for the first 4 years and then increase by $500 per year every year after that (from year 5 on). In year 15, the machine will be scrapped for parts which the company will sell for $5000. a. Draw the cash flow diagram. b. What is the present worth of this machine at an interest rate of 9%? The manufacturing engineering group estimates that yearly operation and maintenance costs will be $3000 per year for the first 8 years, then increase by 5% every year after that. Management has asked you to determine the equivalent annual worth of the machine including both revenues and costs. SET UP (but do not solve) this problem as you would solve it in Excel. c
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