You are considering investing $10,000 in new equipment. You estimate that the net cash flows will be $10,000 the first year but will increase by $2,500 per year the next year and each year thereafter. The equipment is estimated to have a 10-year life and a salvage value of $5,000 at that time. Assume an interest rate of 10%.

a. What is the annual capital cost (ownership cost)?

b. Determine the equivalent annual savings?

c. What is the equivalent annual worth of this project?

d. Is this a good investment (Yes/No)?