Question 3 3.00000 points Save Answer A new equipment has been proposed by engin

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Question 3 3.00000 points Save Answer A new equipment has been proposed by engineers to increase the productivity of a certain manual welding operation. The investment cost is $25,000, and the equipment will have a market value of $5,000 at the end of a study period of five years. Increased productivity attributable to the equipment will amount to $10,000 per year after operating costs have been subtracted from the revenue generated by the additional production. If MARR is 10%, is investing in this eguipment feasible? Use annual worth method

Explanation / Answer

Annual inflows 10000 Annuity factor at 10% 3.7908 Present value of inflows 37908 Add: Present value of salvage 3105 ($ 5000*0.621) Present value of Inflows 41013 Less: Initial investmet 25000 Net present worth 16013 Divide: Annuity factor 3.7908 Annualised Worth 4224.174

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