A large food-processing company is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing $3.2 million to purchase the industrial-strength lasers. The system will save $1,500,000 per year in labor and materials. However, it will incur an additional operating and maintenance cost of $300,000 per year. Annual income taxes will be $170,000. The system is expected to have a 10-year service life and a salvage value of $200,000. If the company's MARR is 18%, calculate the net present worth of this investment.

A large food-processing company is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing $3.2 million to purchase the industrial-strength lasers. The system will save $1,500,000 per year in labor and materials. However, it will incur an additional operating and maintenance cost of $300,000 per year. Annual income taxes will be $170,000. The system is expected to have a 10-year service life and a salvage value of $200,000. If the company's MARR is 18%, calculate the net present worth of this investment.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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