Your firm is thinking about investing $200 comma 000200,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $33 comma 00033,000 in year one and then increasing by $11 comma 00011,000 more each year thereafter. Relevant expenses will be $20 comma 00020,000 in year one and will increase by $10 comma 00010,000 per year until the end of the cell's ninenine-year life. Salvage recovery at the end of year ninenine is estimated to be $11 comma 00011,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 1010% per year?

EAW = -$17,545.71

Explanation:

initial investment = $200,000

cash inflows;

cash outflows:

EAW = equivalent annual worth = equivalent annual benefits - equivalent annual costs

to determine the EAB we must first find the PV of the cash inflows using a financial calculator = $408,348.84

EAB = (PV x r) / [1 - (1 + r)⁻ⁿ] = ($408,348.84 x 10%) / [1 - (1 + 10%)⁻⁹] = $70,905.91

to determine the EAC we must first find the PV of the cash outflows (including initial outlay) using a financial calculator = $509,395

EAC = (PV x r) / [1 - (1 + r)⁻ⁿ] = ($509,395 x 10%) / [1 - (1 + 10%)⁻⁹] = $88,451.62

EAW = $70,905.91 - $88,451.62 = -$17,545.71

answer; /// i do believe the correct answer is (30,000);

idk sorry

explanation: