A manufacturing company is considering the purchase of a new machining center for $300,000 to expand its capacity. It will cost an additional $20,000 to do the site preparation. Both costs will be incurred at the start of year 1 (eg - year 0). With the new machine, the company expects to increase their sales revenue by $10,000 per year. The machine will be used for five years, with an expected salvage value of $75,000. At the interest rate of 12% would the purchase of this machine be justified based on Net Present Worth?

A manufacturing company is considering the purchase of a new machining center for $300,000 to expand its capacity. It will cost an additional $20,000 to do the site preparation. Both costs will be incurred at the start of year 1 (eg - year 0). With the new machine, the company expects to increase their sales revenue by $10,000 per year. The machine will be used for five years, with an expected salvage value of $75,000. At the interest rate of 12% would the purchase of this machine be justified based on Net Present Worth?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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