Question

Question 3 (10 marks) The international parcel service has installed a new radio identification system to help reduce the number of packages that are incorrectly delivered. The capital investment in the system is S 000, and the projected annual saving are tabled below. The system's market value at the end of year 5 is negligible, and the MARR is 18% per year. End of Year Saving $ 25,000 $ 30,000 $ 30,000 $ 40,000 $ 46,000 2 3 4 5 Answer the following and comment on the project profitability a) Draw a cash flowing diagram for the Project. (3 points) b) What is FW of this investment? (6 points) c) Comment on the project profitability or acceptance. (1 point)

Answer 1

46k 40k B0k ask 65k

fw of investment Sum of R ture worth of e ach cash low forscen in future 30000 (i. 18 5000 (1.18) +30000 (1. 1 2) C1.13) 46o + 40000 65001-12)8 28028.15 11

Profifability is seen in fhe siven invesfrenE cash low Fufure Worth oF investent = 38028 1570 Profitable This investment