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This question has been answered incorrectly twice. Please do not attempt if you cannot do correctly. Thank you. Costs associated with the manufacture of miniature high-sensitivity piezoresistive pressure transducers is $76,000 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 $58,000 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 $

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Answer #1

Net present value of savings = present value of savings - additional cost incurred

= 18,000*PVF(8%, 1 year) + 26,000*PVF(8%, 2 years) + 26,000*PVF(8%, 3 years) + 26,000*PVF(8%, 4 years) + 26,000*PVF(8%, 5 years) -16,000

= 18,000* 0.926+ 26,000*3.697 - 16,000

=$96,790

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