Question 3 300000 points Save Answer A new equipment has bee

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

Equivalent uniform annual worth = - $ 25,000 ( A/P , 10% , 5 years ) + $ 10,000 + $ 5000 ( A/F , 10% , 5 years)

Equivalent uniform annual worth = - $ 25,000 * 0.263797 + $ 10,000 + $ 5000 * 0.163797

Equivalent uniform annual worth = $ 4,224.06

The investment in this equipment is feasible because the annual worth is positive.