Question
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 $195,000 MARR 16% p y c y Inflation rate 4% p y c y Life 7 years Project life 10 years Machine value today with life of 3 years $54,500 Machine value today with life of 7 years $43,500 First year costs $27,200 First year benefits $76,800
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