A Company that manufactures air operated drain valve assemblies
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Question:
Engineering Economy
A company that manufactures air-operated drain valve assemblies budgeted $74,00074,000 per year to pay for plastic components over a 55-year period. If the company spent only $42,00042,000 in year 11, what uniform annual amount should the company expect to spend in each of the next 44 years to expend the entire budget? Assume the company uses an interest rate of 1010% per year.
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Find FF in year 55, subtract future worth of $42,00042,000, and then use A/FA/F factor.
F = 74,000(F/A,10F=74,000(F/A,10%,5) – 42,000(F/P,10,5)–42,000(F/P,10%,4),4)
\quad = 74,000(6.1051) – 42,000(1.4641)=74,000(6.1051)–42,000(1.4641)
\quad ==$390,285390,285
A = 390,285(A/F,10A=390,285(A/F,10%,4),4)
\quad = 390,285(0.21547)=390,285(0.21547)
\quad ==$84,09584,095 per year
Answer:
A company that manufactures air-operated drain valve assemblies currently has $120,000 available to pay for plastic components over a 5-year period. If the company spent only $56,000 in year 1, what uniform annual amount can the company spend in each of the next 4 years to deplete the entire budget? Let i = 9% per year. The uniform annual amount the company can spend is $ 139755.14