The overhead costs in an automated factory are expected to increase at an annual compound rate of 10% for the next 7 years. The overhead cost at the end of the first year is $100000. What is the annual worth of the overhead costs for the 7-year period? The time value of money rate is 8% per year.
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- Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.The textile factory is being upgraded. The expectation is that labor costs will decrease at an annual rate of 5% while overhead costs will increase at 8%. Now by the end of the first year the Labor costs $2million Material costs $3 million Overhead costs 1.6 million The time value of money rate is 11% and the time horizon is 7 years. Determine the dollar value for each cost category (labor, material, overhead) for each year and the total cost for each year. Determine the present worth of each cost category and the total cost. Determine the annual worth over 7 years that is equivalent to the present worth of the total cost.In a new, highly automated factory, labor costs are expected to decrease at an annual rate of 5%; material costs will increase at an annual rate of 4%; overhead costs will increase at 8%. The labor, material, and overhead costsat the end of the first year are $2 million, $3 million, and $1.6 million, respectively. The time value of money rate is 11% and the time horizon is 7years. a. Determine the dollar value for each cost category (labor, material,overhead) for each year and the total cost for each year. b. Determine the present worth of each cost category and the total cost. c. Determine the annual worth over 7 years that is equivalent to the present worth of the total cost.
- Metalfab Pump and Filter expects the cost of steel bodies for 6-inch valves to increase by $3.75 every 3 months. If the cost for the first quarter is expected to be $80, what is the present worth of the costs for a 3-year time period at an MARR of 12% per year compounded quarterly? The present worth is $Metalfab Pump and Filter, Inc. estimates that the cost of steel bodies for pressure valves will increase by $2 every 3 months. If the cost for the first quarter is expected to be $80, what is the present worth of the costs for a 3-year time period at an interest rate of 3% per quarter?The cost for manufacturing a component used in intelligent interface converters was $23,000 the first year. The company expects the cost to increase by 2% each year. Calculate the present worth of this cost over a five-year period at an interest rate of 10% per year.
- A new process for manufacturing laser levels will have a first cost of $40,000 with annual cost o f$17,000. Extra income associated with the new process is expected to be $22,000 per year. Determine the payback period at:. (A) i= 0% (B) i= 10% per yearA certain company has the following maintenance cost for all of its machine. On the first 5 years, the company needs P100,000 per year and on the next 7 years he company needs P250,000 per year. How much will the company pay in total if they are going to pay all these costs today? Interest for the whole duration is 10% compounded monthly.A mixing process has an estimated first cost of $200,000. Income is expected to be $78,000 per year. At an MARR of 20% per year, what is the payback period?
- Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be $125,000 in year one and increase by 3% each year through year five. What is the equivalent annual worth of the maintenance costs at an interest rate of 10% per year, compounded bi-monthly (compounded once in two months)? The equivalent annual worth is $The cost of a special purpose equipment will increase at the rate of 10% per year. If the cost for the first year is $10,000, what is the present worth of the costs for a 3-year time period at a MARR of 12% per year compounded annually? Your Answer:Annual maintenance cost for a machine is P1500 this year and it is estimated there is an increase 10% each year. What will be the maintenance cost in second year.