The maintenance of a machine in a manufacturing plant currently costs a company $12,000 every year (paid at the end of each year) with the cost increasing by $1,000 each subsequent year. Because of this, the plant manager is considering replacing this machine with a newer one which would cost $30,000 to purchase today, and then $7,300/year increasing by $500 in each year to maintain (also paid at the end of the year). If the company's MARR is at 7% per year compounded annually, what would be the discounted payback period (in years) for this proposed investment?
The maintenance of a machine in a manufacturing plant currently costs a company $12,000 every year (paid at the end of each year) with the cost increasing by $1,000 each subsequent year. Because of this, the plant manager is considering replacing this machine with a newer one which would cost $30,000 to purchase today, and then $7,300/year increasing by $500 in each year to maintain (also paid at the end of the year). If the company's MARR is at 7% per year compounded annually, what would be the discounted payback period (in years) for this proposed investment?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The maintenance of a machine in a manufacturing plant currently costs a company $12,000 every year (paid at the end of each year) with the cost increasing by $1,000 each subsequent year. Because of this, the plant manager is considering replacing this machine with a newer one which would cost $30,000 to purchase today, and then $7,300/year increasing by $500 in each year to maintain (also paid at the end of the year). If the company's MARR is at 7% per year compounded annually, what would be the discounted payback period (in years) for this proposed investment?
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