Swagelok Enterprises is a manufacturer of miniature fittings and valves. Over a 5-year period, the costs associated with one product line were as follows: first cost of $30,000 and annual costs of $18,000. Annual revenue was $27,000 and the used equipment was salvaged for $4000. What rate of return did the company make on this product?
What will be an ideal response?
0 = -30,000 + (27,000 – 18,000)(P/A,i*,5) + 4000(P/F,i*,5)
Solve by trial and error or spreadsheet
i* = 17.9 %
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