Majestic Aircraft Corporation is considering purchasing composite wing fixtures for the assembly of its signature aircraft. The cost of the assembly system is $3 million with life expectancy of 10 years, annual operating cost of $200,000 with zero salvage value. MAC anticipates a stream of $1,000,000 in revenue per year for 10 years from this project. Using annual worth analysis and assuming MAC uses a MARR (interest rate) of 10 percent, is this investment economically justified? What is the Net Annual Cash Flow? *

Majestic Aircraft Corporation is considering purchasing composite wing fixtures for the assembly of its signature aircraft. The cost of the assembly system is $3 million with life expectancy of 10 years, annual operating cost of $200,000 with zero salvage value. MAC anticipates a stream of $1,000,000 in revenue per year for 10 years from this project. Using annual worth analysis and assuming MAC uses a MARR (interest rate) of 10 percent, is this investment economically justified? What is the Net Annual Cash Flow? *

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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