Answer:
Explanation:
As the loan amount is gradually written off by the cost saved , the interest saved is also considered
P= ( 1+ R)^n
F = 9,000
R = 5% , 0.05
Loan amount - $33,000
N=Number of years
Year 1 = 9000( 1+0.05)^-1= 8,571.43
Year 2 =9000(1+0.05)^-2 = 8,163.27= 16.734.70
Year 3= 9000(1+0.05)^-3= 7,774.54 = 24,509.24
Year 4 = 9,000(1+0.05)^-4= 7,404.32= 31,913.56
Year 5 = 9,000 (1+0.05)^-5= 7,051.74= 38,965.3
Payback period is 5 years.
The company has the option of $33,000 for a control that will be repaid over five years period or a continuing hearing conservation program that would have paid ($9,000*5) $45,000 for the five years.
Comparing the two option , The Engineering control is a cheaper option and even with benefits that will outlast the continuing hearing program.
