Silastic-LC-50 is a liquid silicon rubber designed to provide high clarity, superior mechanical properties, and short cycle time for high speed manufacturers. One high-volume manufacturer used it to achieve smooth release from molds. The company’s projected growth would result in silicon costs of $26,000 next year and costs increasing by $2000 per year through year 5. The interest rate is 10% per year. (a) What is the present worth of these costs using tabulated factors? (b) How is this problem solved using a spreadsheet? Using a financial calculator?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Silastic-LC-50 is a liquid silicon rubber designed to provide high clarity, superior mechanical properties, and short cycle time for high speed manufacturers. One high-volume manufacturer used it to achieve smooth release from molds. The company’s projected growth would result in silicon costs of $26,000 next year and costs increasing by $2000 per year through year 5. The interest rate is 10% per year. (a) What is the present worth of these costs using tabulated factors? (b) How is this problem solved using a spreadsheet? Using a financial calculator?

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