how all work for full credit 1. The production foreman of a plant in reviewing h
ID: 1125202 • Letter: H
Question
how all work for full credit 1. The production foreman of a plant in reviewing his records found that an assembly line had the following production record: 5 years ago 4 years ago 3 years ago 2 years ago Last year ago $10,000 $9,000 $8,000 $7,000 $6,000 After consulting with the product engineer, he changed the sequence on the assembly line. He believes that production will be $7,000 this year and will increase by $1,000 a year in each of the following 4 years. If his estimate of the future is correct, what will be the equivalent uniform annu benefit for the 10-year period? Assume interest at 8%. (15 pts)Explanation / Answer
Benefits can be discounted with annual interest of 8% to get present value out of it.
Now as long as my understading of this question is concerned i think this needs to simply discount to find present value of future benefits
PV of Annual Benefits =7000 + 8000(1/1.08) + 9000(1/1.08^2) +10000(1/1.08^3) +11000(1/1.08^4)
=7000+7407+7716+7938+8085 =$38144 discounted future value to present
Now will get present value for past values of production like this
10000(1.08^5) +9000(1.08^4)+8000(1.08^3)+7000(1.08^4)+6000(1.08^1)=14693+12244+10077+9523+6480=$52917
Answer could be $52917+$38144 =$90361
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