Engineering, 24.04.2021 05:00 kyle696969

A firm is considering investing in a new piece of material handling equipment that should save on the current annual labor cost of moving the materials by hand. The device costs $750 can be expected to result in $500 annual savings for years 1, 2, and 3; then, it will have worn out and have to be replaced. Assume the interest rate that determines time value of money for this firm is 7% Required:
a. What is the payback period for the expenditure of the $1000?
b. Calculate the present worth (PW) of the three years of savings, assuming the savings occur at the end of each year of ownership.
c. Calculate the net present worth (NPW) of the investment.
d. Based on your answers to į and iii, should the firm invest in the equipment?

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