Question

Please cash flow diagram.

West Coast Marine and RV is considering replacing its wired pendant controllers on its heavy-duty cranes with new portable infrared keypad controllers. The company expects to achieve cost savings of $38,000 the first year and amounts increasing by $1,500 each year thereafter through year 4th. At an interest rate of 4% per year, what is the equivalent annual worth of the savings

Answer 1

38000+3G i=4% n=4 years G=$1500 38000+G 38000+2G $38000 0 1 2 3

Equivalent annual worth of savings=38000+G*(P/G,0.04,4)*(A/P,0.04,4)

Let us calculate the interest fators

(A/P,1,n) = 1 -

0.04 CA/P,0.04, 4) = 1 - = 0.275490 (1+0.04)

(P/G,i,n) = (1+i)" -1 2(1+i) i(1+i)n

796997'S = Amy _+(100+ 1)! (500 + 1),500 – = (1 'vo'o'9/d) 1-(100+ 1)

Equivalent annual worth of savings=38000+1500*5.266962*0.275490=40176.49