A new product requires an initial investment of $140,000, and an annual operating expense of $32,000. This product is estimated to generate $47,000 revenue in the first year, and the revenue is expected to increase by $7,000 each year thereafter for 11 years. Determine whether this new product is a good investment using the ERR method. Assume MARR is 4% per year.

A new product requires an initial investment of $140,000, and an annual operating expense of $32,000. This product is estimated to generate $47,000 revenue in the first year, and the revenue is expected to increase by $7,000 each year thereafter for 11 years. Determine whether this new product is a good investment using the ERR method. Assume MARR is 4% per 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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