Chapter 05, Problem 009 (Video Solution) Aerotron Electronics is considering the purchase of a water...
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Chapter 05, Problem 009 (Video Solution) Aerotron Electronics is considering the purchase of a water filtration system to assist in circuit board manufacturing. The system costs $170,000. It has an expected life of 7 years at which time its salvage value will be $7,500. Operating and maintenance expenses are estimated to be $4,000 per year. If the filtration system is not purchased, Aerotron Electronics will have to pay Bay City $14,000 per year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must borrow 1/2 of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to 3 equal annual payments, with the 1st payment due at the end of year 2. The loan interest rate is 8% compounded annually. Aerotron Electronics' MARR is 10% compounded annually. Click here to access the TVM Factor Table Calculator What is the annual worth of this investment? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +10
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