A large food-processing corporation is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing $3.5 million to purchase the industrial-strength lasers. The system will save $1,550,000 per year in labor and materials. However, it will require an additional operating and maintenance cost of $350,000. Annual income taxes will also increase by $150,000. The system is expected to have a 10-year service life and will have a salvage value of about $200,000. If the company's MARR is 18%, use the NPW method to justify the project. Equal Payment Series Present Compound Amount Factor Single Payment Present Worth Factor Compound Amount Factor Sinking Fund Factor Worth Capital Recovery Factor (A/P, i, N) Factor (P/F, i, N) (F/A, i, N) (A/F, i, N) (P/A, i, N) (F/P, i, N) 1.1800 0.8475 1.0000 1.0000 0.8475 1.1800 1.3924 0.7182 2.1800 0.4587 1.5656 0.6387 0.6086 3.5724 0.2799 2.1743 0.4599 1.6430 1.9388 0.5158 5.2154 0.1917 2.6901 0.3717 2.2878 0.4371 7.1542 0.1398 3.1272 0.3198 6 2.6996 0.3704 9.4420 0.1059 3.4976 0.2859 7 3.1855 0.3139 12.1415 0.0824 3.8115 0.2624 8 3.7589 0.2660 15.3270 0.0652 4.0776 0.2452 9 4.4355 0.2255 19.0859 0.0524 4.3030 0.2324 10 5.2338 0.1911 23.5213 0.0425 4.4941 0.2225 The NPW of the project is $thousand. (Round to the nearest whole number. ZI~ 3&50 N 1 2 4
A large food-processing corporation is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing $3.5 million to purchase the industrial-strength lasers. The system will save $1,550,000 per year in labor and materials. However, it will require an additional operating and maintenance cost of $350,000. Annual income taxes will also increase by $150,000. The system is expected to have a 10-year service life and will have a salvage value of about $200,000. If the company's MARR is 18%, use the NPW method to justify the project. Equal Payment Series Present Compound Amount Factor Single Payment Present Worth Factor Compound Amount Factor Sinking Fund Factor Worth Capital Recovery Factor (A/P, i, N) Factor (P/F, i, N) (F/A, i, N) (A/F, i, N) (P/A, i, N) (F/P, i, N) 1.1800 0.8475 1.0000 1.0000 0.8475 1.1800 1.3924 0.7182 2.1800 0.4587 1.5656 0.6387 0.6086 3.5724 0.2799 2.1743 0.4599 1.6430 1.9388 0.5158 5.2154 0.1917 2.6901 0.3717 2.2878 0.4371 7.1542 0.1398 3.1272 0.3198 6 2.6996 0.3704 9.4420 0.1059 3.4976 0.2859 7 3.1855 0.3139 12.1415 0.0824 3.8115 0.2624 8 3.7589 0.2660 15.3270 0.0652 4.0776 0.2452 9 4.4355 0.2255 19.0859 0.0524 4.3030 0.2324 10 5.2338 0.1911 23.5213 0.0425 4.4941 0.2225 The NPW of the project is $thousand. (Round to the nearest whole number. ZI~ 3&50 N 1 2 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Economic Feasibility Assessment for Laser Technology in Food-Processing**
A large food-processing corporation is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing $3.5 million to purchase the industrial-strength lasers. The system will save $1,550,000 per year in labor and materials. However, it will require an additional operating and maintenance cost of $350,000. Annual income taxes will also increase by $150,000. The system is expected to have a 10-year service life and will have a salvage value of about $200,000. If the company’s Minimum Attractive Rate of Return (MARR) is 18%, use the Net Present Worth (NPW) method to justify the project.
**Financial Analysis Table:**
| **N** | **Single Payment** | **Equal Payment Series** |
|-------|-------------------|-------------------------|
| | **Compound Amount Factor (F/P, i, N)** | **Present Worth Factor (P/F, i, N)** | **Compound Amount Factor (F/A, i, N)** | **Sinking Fund Factor (A/F, i, N)** | **Present Worth Factor (P/A, i, N)** | **Capital Recovery Factor (A/P, i, N)** |
| **1** | 1.1800 | 0.8475 | 1.0000 | 1.0000 | 0.8475 | 1.1800 |
| **2** | 1.3924 | 0.7182 | 2.1800 | 0.4587 | 1.5656 | 0.6387 |
| **3** | 1.6430 | 0.6086 | 3.5724 | 0.2799 | 2.1743 | 0.4599 |
| **4** | 1.9388 | 0.5158 | 5.2154 | 0.1917 | 2.6901 | 0.3717 |
| **5** | 2.2878 | 0.4371 | 7.1542 | 0.1398 | 3.127
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