## Financial Decision Making for Equipment Purchase**Scenario:**Bailey, Inc. is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $120,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Annual labor costs would increase $2,000 using the gang punch, but annual raw material costs would decrease $15,000. The Minimum Attractive Rate of Return (MARR) is 4.0% per year.### Part a**Question:**What is the present worth of this investment?**Instructions:**Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±5.**Answer Box:**- What is the present worth of this investment? $ [Input Box]**Additional Resources:**- eTextbook and Media [Button to save for later]**Attempts Allowed:**- 3 attempts- [Button to Submit Answer]### Part b**Note:**The parts of this question must be completed in order. This part will be available when you complete Part a.**Additional Information:**- Weather Information: 85°F Mostly CloudyEnsure to input all calculations precisely and adhere to rounding instructions to derive the correct present worth of the investment. Utilize the provided resources for further guidance before submitting your final answer.

Present worth is a financial concept that refers to the value today of a future stream of cash…

Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $120,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Annual labor costs would increase $2,000 using the gang punch, but annual raw material costs would decrease $15,000. MARR is 4.0%/year. Part a What is the present worth of this investment? $ CH places and searach de

Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $120,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Annual labor costs would increase $2,000 using the gang punch, but annual raw material costs would decrease $15,000. MARR is 4.0%/year. Part a What is the present worth of this investment? $ CH places and searach de

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $150,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Labor costs would increase $1,000 per year using the gang punch, but raw material costs would decrease $14,500 per year. MARR is 5%/year. Part a What is the internal rate of return of this investment? % Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.2. Save for Later Part b Attempts: 0 of 3 used Submit Answer
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