(a) How long would it take to recover an investment of $245,000 in enhanced CNC controls that include axis control to eight axes on the milling model, if the associated income is $92,000 per year, expense is $38,000 per year, and the salvage value is estimated to be 15% of the first cost? Use a MARR of 15% per year. (b) Also, write the spreadsheet function that determines np.
What will be an ideal response?
(a) Develop the PW relation and solve for np
-245,000 + (92,000 – 38,000)(P/A,15%,np) + 245,000(0.15)(P/F,15%,np) = 0
Solve by trial and error:
Try n = 7: -245,000 + (92,000 – 38,000)(4.1604) + 36,750(0.3759) = 0
-6524 < 0
Try n = 8: -245,000 + (92,000 – 38,000)(4.4873) + 36,750(0.3269) = 0
+9327 > 0
Therefore, np ? 8 years
(b) Spreadsheet function: = NPER(15%,54000,-245000,0.15*245000) displays 7.4 years
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