A new production system for a factory is to be purchased and installed for $135331 . This system will save approximately 300,000kWh of electric power each year for a 6-year period. Assume the cost of electricity is $0.10 per kWh , and factory MARR is 15%
A new production system for a factory is to be purchased and installed for $135331 . This system will save approximately 300,000kWh of electric power each year for a 6-year period. Assume the cost of electricity is $0.10 per kWh , and factory MARR is 15%
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...
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Question
A new production system for a factory is to be purchased and installed for
$135331
. This system will save approximately
300,000kWh
of electric power each year for a 6-year period. Assume the cost of electricity is
$0.10
per
kWh
, and factory MARR is
15%
per year, and the salvage value of the system will be
$8662
at year 6 . Using the PW method to analyzes if this investment is economically justified
A- calculate the PW of the above investment and insert the result below.
_______________________
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