1 answer

Costs associated with the manufacture of miniature high-sensitivity piezoresistive pressure transducers is $78,000 per year. A...

Question:

Costs associated with the manufacture of miniature high-sensitivity piezoresistive pressure transducers is $78,000 per year.
Costs associated with the manufacture of miniature high-sensitivity piezoresistive pressure transducers is $78,000 per year. A clever industrial engineer found that by spending $16,000 now to reconfigure the production line and reprogram two of the robotic arms, the cost will go down to $55,000 next year and $50,000 in years 2 through 5. Using an interest rate of 8% per year, determine the present worth of the savings due to the reconfiguration. The present worth of the savings is determined to be $ < Pray 4 of 5 !!! Next > Search

Answers

Present worth the savings = Present worth of the savings from year 1 to year 5

PW = $ 55,000 \times (P/F, 8% , 1 year) + $ 50,000 \times ( P/A , 8 % , 4 years) \times ( P/F , 8% , 1 year)

Where  (P/F, 8% , 1 year) = Single payment present worth

( P/A , 8 % , 4 years) = Uniform series present worth

PW of the savings = $ 55,000 \times 0.925926 + $ 50,000 \times 3.312127  \times 0.925926

PW of the savings = $ 204,265.2 \approx $ 204,265

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