Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs $30.000. It has an expected life of 7 years at which time its salvage value will be $9.500. Operating and maintenance expenses are estimated to be $2.000 per year. If the filtration system is not purchased, Aerotron Electronics will have to pay Bay City $11.500 per year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must borrow 1/2 of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to 3 equal annual payments, with the 1st payment due at the end of year 2. The loan interest rate is 9.5 % compounded annually. Aerotron Electronics' MARR is 11.5% compounded annually. Part a What is the present worth of this investment? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 10.
Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs $30.000. It has an expected life of 7 years at which time its salvage value will be $9.500. Operating and maintenance expenses are estimated to be $2.000 per year. If the filtration system is not purchased, Aerotron Electronics will have to pay Bay City $11.500 per year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must borrow 1/2 of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to 3 equal annual payments, with the 1st payment due at the end of year 2. The loan interest rate is 9.5 % compounded annually. Aerotron Electronics' MARR is 11.5% compounded annually. Part a What is the present worth of this investment? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 10.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs
$30,000. It has an expected life of 7 years at which time its salvage value will be $9.500. Operating and maintenance expenses are
estimated to be $2.000 per year. If the filtration system is not purchased. Aerotron Electronics will have to pay Bay City $11.500 per
year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must
borrow 1/2 of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to 3 equal annual payments,
with the 1st payment due at the end of year 2. The loan interest rate is 9.5 % compounded annually. Aerotron Electronics' MARR is
11.5% compounded annually.
Part a
What is the present worth of this investment?$
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 210.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe5560fd2-0eea-41a5-a556-7c2f4f6066cc%2Fb2591674-f337-4535-bdc5-5531306db85b%2Fc5lj7ti_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs
$30,000. It has an expected life of 7 years at which time its salvage value will be $9.500. Operating and maintenance expenses are
estimated to be $2.000 per year. If the filtration system is not purchased. Aerotron Electronics will have to pay Bay City $11.500 per
year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must
borrow 1/2 of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to 3 equal annual payments,
with the 1st payment due at the end of year 2. The loan interest rate is 9.5 % compounded annually. Aerotron Electronics' MARR is
11.5% compounded annually.
Part a
What is the present worth of this investment?$
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 210.
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