A company is considering establishing a new machine to automate a manufacturing
ID: 3031684 • Letter: A
Question
A company is considering establishing a new machine to automate a manufacturing process. The machine will save $50,000 in labor annually. The machine can be purchased for $200,000 today and will be used for 10 years. It has a salvage value of $10,000 at the end of its useful life. The new machine will require an annual maintenance cost of $6,000. The corporation has a minimum rate of return of 10%. Calculate the net present worth (NPW) of Profit which can be calculated as follows: NPW of Profit = PW of Benefits - PW of Costs (Round to the nearest integer) 74,214 is the correct answer, please show how to get there, dont just give me a table with some values pls
Explanation / Answer
Solution: given annual lebour save is 50000 doller therefore after 10 year total save is 500000 doller
for one year maintenece cost is 6000 doller after 10 year total maintenece is 60000 doller
total selvage value at the end of life is 10000 doller
rate of return is 10% then 20000 doller is save
Net present worth (NPW)=PW of benefits-PW of costs
=500000-200000-60000-10000=223000 doller
=223000-20000=203000 doller
sir i have confuse your answer 74214 doller, verry try but answer not matching SORRY
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