A manufacturer plans to open a new plant. The new plant will cost $4,000,000 to build and make ready for production. Company management believes that the plant will produce a net profit of $100,000 in the first year and that profit will increase 5% per year until year 9 at which point profit will remain constant for the remainder of the plant's useful life. Determine the payback period for the plant. Do not consider the effect of interest. Express your answer in years to the nearest whole year.

A manufacturer plans to open a new plant. The new plant will cost $4,000,000 to build and make ready for production. Company management believes that the plant will produce a net profit of $100,000 in the first year and that profit will increase 5% per year until year 9 at which point profit will remain constant for the remainder of the plant's useful life. Determine the payback period for the plant. Do not consider the effect of interest. Express your answer in years to the nearest whole year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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