Your firm is thinking about investing $300,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $39,000 in year one andthen increasing by $13,000 more each year thereafter, Relevant expenses will be $20,000 in year one and will increase by $10,000 per year until the end of the cell'snine-year life. Salvage recovery at the end of year nine is estimated to be $10,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 10%per year? How sensitive is the annual worth to ± 10% changes in the MARR? Are changes in the MARR really a significant consideration in this problem?Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year.E Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year.Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year.Find Annual Equivalent worth for MARR at 9% 10% and 11%

here we calculate the annual equivalent worth for the Different MRR by using the given information , so the calculation as follow-so here we calculate the annual equivalent when , When MARR = 9% Then, Present worth = -300000 + (39000 x (P/A, 9%, 9) + 13000 x (P/G, 9%, 9)) - (20000 x (P/A, 9%, 9) + 10000 x (P/G, 9%, 9)) + 10000 x (P/F, 9%, 9) Present worth = -300000 + (39000 x 5.9952 + 13000 x 20.5711) - (20000 x 5.9952 + 10000 x 20.5711) + 10000 x .4604 Present worth = -119774 So, annual equivalent worth = -119774 x (A/P, 9%, 9) annual equivalent worth= -119774 x .1668 annual equivalent worth = -$19978.3 so here annual equivalent worth is -$19978.3 Here we calculate the annual equivalent , When MARR = 10% so , Present worth = -300000 + (39000 x (P/A, 10%, 9) + 13000 x (P/G, 10%, 9)) - (20000 x (P/A, 10%, 9) + 10000 x (P/G, 10%, 9)) + 10000 x (P/F, 10%, 9) Present worth = -300000 + (39000 x 5.7590 + 13000 x 19.4215) - (20000 x 5.7590 + 10000 x 19.4215) + 10000 x .4241 Present worth = -128074 So, annual equivalent worth = -128074 x (A/P, 10%, 9) annual equivalent worth= -128074 x .1736 annual equivalent worth = -$22233.6 so here we conclude that annual equivalent worth is -$22233.6 So here we calculate the annual equivalent , When MARR = 11% Then, Present worth = -300000 + (39000 x (P/A, 11%, 9) + 13000 x (P/G, 11%, 9)) - (20000 x (P/A, 11%, 9) + 10000 x (P/G, 11%, 9)) + 10000 x (P/F, 11%, 9) Present worth = -300000 + (39000 x 5.5370 + 13000 x 18.352) - (20000 x 5.5370 + 10000 x 18.352) + 10000 x .3909 Present worth = -135832 So, annual equivalent worth = -135832 x (A/P, 11%, 9) annual equivalent worth = -135832 x .1806 annual equivalent worth = -$24531.3 so here annual equivalent worth is -$24531.3 here as per calculation we also conclude that here , All three interest rates show that annual equivalent worth is negative.

Business

Economics

Your firm is thinking about investing $300,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $39,000 in year one and then increasing by $13,000 more each year thereafter. Relevant expenses will be $20,000 in year one and will increase by $10,000 per year until the end of the cell's nine-year life. Salvage recovery at the end of year nine is estimated to be $10,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 10% per year? How sensitive is the annual worth to t 10% changes in the MARR? Are changes in the MARR really a significant consideration in this problem? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year. Find Annual Equivalent worth for M ARR at 9% 10% and 11%

Your firm is thinking about investing $300,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $39,000 in year one and then increasing by $13,000 more each year thereafter. Relevant expenses will be $20,000 in year one and will increase by $10,000 per year until the end of the cell's nine-year life. Salvage recovery at the end of year nine is estimated to be $10,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 10% per year? How sensitive is the annual worth to t 10% changes in the MARR? Are changes in the MARR really a significant consideration in this problem? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year. Find Annual Equivalent worth for M ARR at 9% 10% and 11%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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