Equivalent to the cumulative labor-material and energy costs

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In a new, highly automated factory, labor costs are expected to decrease at an annual compound rate of 5 %; material costs are expected to increase at an annual compound rate of 6%; and energy costs are expected to increase at an annual compound rate of 3 %. The labor, material and energy costs the first year are $3 million, $2 million, and $1,500,000. a. What will be the value of each cost during the fifth year? (i = j) b. Using an interest rate of 10 % compounded annually, what uniform annual costs over a 5-year period would be equivalent to the cumulative labor, material, and energy costs?

Reference no: EM131009791

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