please show work step by step Question 3 300000 points Save

please show work step by step

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

Solution

Annual Inflows 10000 Annuity factor for 5 years at 10% 3.7908 Present value of inflows 37908 Present value of Salvage 3105 (5000 *0.621) Total Present value of inflows 41013 Less: Initial Investment 25000 Net present worth 16013 Divide: Annuity factor 3.7908 Annualised Worth 4224