Suppose, live A-V Engineering Fabrication plans to invest to buy the new machine

Question

Suppose, live A-V Engineering Fabrication plans to invest to buy the new machine with an estimate of $90,000. This new will enable mote production which estimates an average ear rung of $50,000/year. Salvage value of the machine after 10 years is expected to be $10,000. However, running the new machine for extra time will incur additional operating cost of $15.000/year. Assume a fixed 15% interest rate. How many years (Find n, years ?) would it take to get the return on the new machine investment.

Explanation / Answer

0 -90000 1 -90000 -90000 1 35000 0.8696 30434.78 -59565.2 2 35000 0.7561 26465.03 -33100.2 3 35000 0.6575 23013.07 -10087.1 year of positive return 4 35000 0.5718 20011.36 9924.243 5 35000 0.4972 17401.19 27325.43 6 35000 0.4323 15131.47 42456.89 7 35000 0.3759 13157.8 55614.69 8 35000 0.3269 11441.56 67056.25 9 35000 0.2843 9949.184 77005.44 10 45000 0.2472 11123.31 88128.75 Discounted payback 3.5041 Years 3+(10087.1/20011.36)

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