Take note: Draw the cash flow diagram and use interest rate with five decimal places.

An electronic device is available that will reduce this year's labor cost by$10,000.The equipment is expected to last for eight years. If labor cost increase at an average rate of 7% per year at interest rate is 12% compounded bimonthly

1. What is the maximum amount that we could justify spending for the device?
2. What is the uniform annual equivalent value (A) of labor costs over the eight year period?