### Project Evaluation using NPW MethodA large food-processing corporation is considering using laser technology to speed up and streamline the potato-peeling process. To implement the system, the company anticipates needing $3.5 million to purchase the industrial-strength lasers. The system will save $1,650,000 per year in labor and materials. However, it will require an additional operating and maintenance cost of $350,000. Annual income taxes will also increase by $150,000. The system is expected to have a 10-year service life and will have a salvage value of $200,000. If the company's MARR (Minimum Attractive Rate of Return) is 18%, use the NPW (Net Present Worth) method to justify the project.**Click the icon to view the interest factors for discrete compounding when MARR = 18% per year.****The NPW of the project is $ ____ thousand. (Round to the nearest whole number.)**#### Interest Factors Table for MARR = 18%| **N** | **Single Payment** || | **Compound Amount Factor (F/P, i, N)** | **Present Worth Factor (P/F, i, N)** | **Equal Payment Series** || | | | **Compound Amount Factor (F/A, i, N)** | ** Sinking Fund Factor (A/F, i, N)** | **Uniform Series Present Worth Factor (P/A, i, N)** | **Capital Recovery Factor (A/P, i, N)** ||---|---|---|---|---|---|---|| 1 | 1.1800 | 0.8475 | 1.0000 | 1.1800 | 0.8475 | 1.1800 || 2 | 1.3924 | 0.7182 | 2.1800 | 0.4587 | 1.5665 | 0.6387 || 3 | 1.8430 | 0.6086 | 3.5243 | 0.2596 | 2.1742 | 0.4599 || 4 | 2.1738 | 0.5158 | 5.1596 | 0.1719 | 2.7951 | 0.3717 || 5 | 2.8787 |

Net present worth (NPW) is used to determine the present value of all future cash flows. Net present…

Click the icon to view the interest factors for discrete compounding when MARR = 18% per year. the NPW of the project is! $thousand. (Round to the nearest whole number.) More Info Single Payment Compound Amount Factor (F/A, i, N) 1.0000 2.1800 N 1 2 Compound Amount Factor (F/P, i, N) 1.1800 1.3924 Present Worth Factor (P/F, i, N) 0.8475 0.7182 Equal Payment Series Sinking Present Fund Factor Worth Factor (A/F, i, N) (P/A, i, N) 1.0000 0.8475 0.4587 1.5656 Capital Recovery Factor (A/P, i, N) 1.1800 0.6387 - X

Click the icon to view the interest factors for discrete compounding when MARR = 18% per year. the NPW of the project is! $thousand. (Round to the nearest whole number.) More Info Single Payment Compound Amount Factor (F/A, i, N) 1.0000 2.1800 N 1 2 Compound Amount Factor (F/P, i, N) 1.1800 1.3924 Present Worth Factor (P/F, i, N) 0.8475 0.7182 Equal Payment Series Sinking Present Fund Factor Worth Factor (A/F, i, N) (P/A, i, N) 1.0000 0.8475 0.4587 1.5656 Capital Recovery Factor (A/P, i, N) 1.1800 0.6387 - X

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...

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A large food-processing corporation is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing $3.5 million to purchase the industrial-strength lasers. The system will save $1,550,000 per year in labor and materials. However, it will require an additional operating and maintenance cost of $350,000. Annual income taxes will also increase by $150,000. The system is expected to have a 10-year service life and will have a salvage value of about $200,000. If the company's MARR is 18%, use the NPW method to justify the project. Equal Payment Series Sinking Present Compound Amount Factor Fund Single Payment Compound Present Amount Worth Factor (F/P, i, N) 1.1800 Worth Capital Recovery Factor Factor Factor Factor N (P/F, i, N) (F/A, i, N) (A/F, i, N) (P/A, i, N) (A/P, i, N) 1 0.8475 1.0000 1.0000 0.8475 1.1800 2 1.3924 0.7182 2.1800 0.4587 1.5656 0.6387 3 1.6430 0.6086 3.5724 0.2799 2.1743 0.4599…
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