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Dovator [93]
3 years ago
11

Rubbermaid Plastics plans to purchase a rectilinear robot for pulling parts from an injection molding machine. Because of the ro

bot’s speed, the company expects production costs to decrease by $100,000 per year in each of the first 3 years and by $200,000 per year in the next 2 years. What is the present worth of the cost savings if the company uses an interest rate of 15% per year on such investments?
Business
1 answer:
liubo4ka [24]3 years ago
3 0

Answer:

The present worth of the cost savings if the company uses an interest rate of 15% per year on such investments is $442108.5079.

Explanation:

Present Worth = $100,000/(1 + 15%) + $100,000/(1 + 15%)^2 + $100,000/(1 + 15%)^3 + $200,000/(1 + 15%)^4 + $200,000/(1 + 15%)^5

                         = $442108.5079

Therefore, the present worth of the cost savings if the company uses an interest rate of 15% per year on such investments is $442108.5079.

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