Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $135,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Annual labor costs would increase $4,500 using the gang punch, but annual raw material costs would decrease $9,000. MARR is 3.75 %/year. a.)What is the present worth of this investment?
Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $135,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Annual labor costs would increase $4,500 using the gang punch, but annual raw material costs would decrease $9,000. MARR is 3.75 %/year. a.)What is the present worth of this investment?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
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Problem 1P: Talbot Industries is considering launching a new product. The new manufacturing equipment will cost...
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Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $135,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Annual labor costs would increase $4,500 using the gang punch, but annual raw material costs would decrease $9,000. MARR is 3.75 %/year.
a.)What is the present worth of this investment?
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