The production foreman of a plant in reviewing his records found den an assembly
ID: 2802330 • Letter: T
Question
The production foreman of a plant in reviewing his records found den an assembly he had the following production record: · 5 years ago 4 years ago 3 years ago 2 years ago Last year ago S10,000 $9,000 $8,000 $7,000 $6,000 After consulting with the product engineer, he changed the sequence on the assembiy ine. He believes that production will be $7,000 this year and will increase by $1.000 a yer in each of the following 4 years. If his estimate of the future is correct, what will be the equivalent uniform auel benefit for the 10-year period? Assume interest at 8%. (15 pts)Explanation / Answer
EUAC =
= {10000 (P/A, 8%, 5) - 1000 (P/G, 8%, 5) + [7000 (P/A, 8%, 5) + 1000(P/G, 8%, 5)] [(P/F, 8%, 5)] } * (A/P, 8%, 10)
= (10000*(3.993) - 1000*(7.372) + (7000*(3.993) + 1000*(7.372))*(0.6806)) * (0. 1490)
= 8433.23
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