Makes variable area flow meters that measure liquid-gas flow

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Swagelok Co. of Solon, Ohio, makes variable area flow meters (VAFs) that measure liquid and gas flow rates by means of a tapered tube and float. If tooling and setup costs were $400,000 in year 0 and an additional $190,000 in year 3, determine the external rate of return using the modified rate of return approach. The revenue was $160,000 per year in years 1 through 10. Assume the company’s MARR is 20% per year and its cost of capital is 9% per year.

Reference no: EM13834230

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