Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Merry Industries is considering a new piece of equipment for a project lasting 10 years with details as shown below. The costs and benefits are
| Merry Industries is considering a new piece of equipment for a project lasting 10 years with details as shown below. The costs and benefits are expected to keep increasing with the inflation rate even when a new machine is put into operation. Taking these into account, what is the annual worth that the company can expect from the machine? | ||||||||||||||
| Initial cost | $95,000 | |
| MARR | 14% | p y c y |
| Inflation rate | 3% | p y c y |
| Life | 7 | years |
| Project life | 10 | years |
| Machine value today with life of 3 years | $34,500 | |
| Machine value today with life of 7 years | $23,500 | |
| First year costs | $12,200 | |
| First year benefits | $36,800 |
| A. $3,260 | ||
| B. $3,969 | ||
| C. $4,779 | ||
| D. $5,673 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Finance Led Capitalism Shadow Banking Re Regulation And The Future Of Global Markets
Authors: Robert Guttmann
1st Edition
1137398566, 978-1137398567
