Question

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New equipment installed at your plant has drastically improved the production process over the last six months. The amount of scrap reduction over a period of six months in dollars is shown in the table below. Month Savings US A6 2000o $22,000 6,oGo 2,0 0 0 2 3 $24,000 20,000 yo 4 $26,000 20,0 G,66 $28,000 $30,000 20,000 FG, 660 t20, coo 2o, Goo flo,600 What is the present worth (P) of the savings over the six-month period? To receive full credit, you must use an arithmetic gradient. Assume that interest is 6% per year, compounded monthly. Construct cash flow diagrams and show all your work.

Answer 1