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Problem Statement. A company invested $200,000 in a new process expecting the following schedule returns on their investment. $10,000 at the end of year 1
Problem Statement. A company invested $200,000 in a new process expecting the following schedule returns on their investment. $10,000 at the end of year 1 and increasing by $5000 starting year 2 through year through 15. Maintenance costs are estimated at $1000 per year for the first 10 years, and $500.00 per year for years 11 through 15. The value of the process is $10,000 at the end of 15 years. a) Draw a cash flow for this project. b) If the interest rate per year is 8%, what is the present value of this investment? Is it a good investment? c) If the interest rate per year is 8%, compounded every six month, what is the annual worth (A) of this project. d) If the company could save $50,000 when purchasing the process but will incur an additional $2700 per year for maintenance, is it a good proposal
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