Your firm is thinking about investing $200,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $30,000 in year one and then increasing by $10,000 more each year there after. Relevant expenses will be $10,000 in year one and will increase by $5,000 per year until the end of the cell’s seven-year life. Salvage recovery at the end of year seven is estimated to be $8,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 10% per year?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Your firm is thinking about investing $200,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $30,000 in year one and then increasing by $10,000 more each year there after. Relevant expenses will be $10,000 in year one and will increase by $5,000 per year until the end of the cell’s seven-year life. Salvage recovery at the end of year seven is estimated to be $8,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 10% per year?

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