Reference no: EM132722869
Question: 1) What is the decision rule for judging the attractiveness of investments based on annual worth? Mayvery, Inc., is considering design change that will cost $6,000 and will result in an annual savings of $1,000 per year for the 6 year life of the project. A cost of $2,000 will be avoided at the end of the project as a result of the change. MARR is 8%/year.
a. What is the annual worth of this investment?
c. Should Mayvery implement the design change?
2)Final Finishing is considering three mutually exclusive alternatives for a new polisher. Each alternative has an expected life of 10 years and no salvage value. Polisher 1 requires an initial investment of $20,000 and provides annual benefits of $4,465. Polisher 2 requires an initial investment of $10,000 and provides annual benefits of $1,770. Polisher 3 requires an initial investment of $15,000 and provides annual benefits of $3,580. MARR is 15%/year.
a. What is the annual worth of each polisher?
b. Which polisher should be recommended?
3)The overhead costs in a highly automated factories are expected to increase at an annual compound rate of 10% for the next 7 years. The overhead cost at the end of the first year is $200,000. What is the annual worth of the overhead costs for the 7-year period? The time value of money rate is 8%/year.
Also, calculate above question 6% for the interest rate.
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: What is the decision rule for judging the attractiveness of investments based on annual worth? Mayvery, Inc., is considering design change that will cost $6,000
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