Calculate the ARR for a manufacturing company

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Question - Calculate the ARR for a manufacturing company purchasing a new equipment. The details are as follows:

$95,000 for equipment with useful life of 8 years and no salvage value.

Maintenance costs are expected to be $6,900 per year and increase by 4% in Year 6 and remain at that rate.

Materials in Year 1 are estimated to be $18,000 but remain constant at $15,000 per year for the remaining years.

Labor is estimated to start at $80,000 in Year 1, increasing by 4% each year after.

Revenues are estimated from year 1 - 7 to be: 0; 90,000; 100,000; 125,000; 150,000; 150,000; 150,000;

Reference no: EM132700441

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