Question

The cash flows in the table below represent the potential annual savings associated with two different types of production processes, each of which requires an investment of $33,000. Assume an interest rate of 7%.

Process A - $33,000 $17,670 $15,650 $13,630 $11,610 Process B -$33,000 $14,350 $14,350 $14,350 $14,350 4

ingle Payment radient Serie Gradient Gradient ual Pavment Serie Capital Recovery Factor (AP, i, N) 1.0700 0.5531 Compound Present Compound Sinking Amount Factor (FP, iN) 1.0700 1.1449 1.2250 1.3108 1.4026 Worth Factor (PF, i, N) 0.9346 0.8734 0.8163 0.7629 0.7130 Amount Factor (FIA, i,N) 1.0000 2.0700 3.2149 4.4399 5.7507 Factor (AF, i, N) 1.0000 0.4831 0.3111 0.2252 0.1739 Present Worth Factor (P/A, i, N) 0.9346 1.8080 2.6243 3.3872 4.1002 Uniform Series (NG, İN) 0.0000 0.4831 0.9549 1.4155 1.8650 Present or (P/G, i, N) 0.0000 0.8734 2.5060 4.7947 7.6467 0.3811 0.2952 0.2439 4 1.5007 1.6058 1.7182 1.8385 1.9672 0.6663 0.6227 0.5820 0.5439 0.5083 7.1533 8.6540 10.2598 11.9780 13.8164 0.1398 0.1156 0.0975 0.0835 0.0724 4.7665 5.3893 5.9713 6.5152 7.0236 2.3032 2.7304 3.1465 3.5517 3.9461 10.9784 14.7149 18.7889 23.1404 27.7156 0.2098 0.1856 0.1535 0.1424 10

Please show work, so I can understand how you came to the answers for each.

A) Determine the equivalent annual savings for each process

1) The equivalent annual savings for process A are $_____

2) The equivalent annual savings for process B are $_____

B) Determine the hourly savings for each process, assuming 2000 hours of operation per year

1) Process A -

2) Process B -

Thank you very much for your assistance.

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Answer #1

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