Should aerotron electronics buy the water filtration system
Course:- Civil Engineering
Reference No.:- EM13298444

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Civil Engineering

Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs $40,000. It has an expected life of 7 years, at which time its salvage value will be $7,500. Operating and maintenance expenses are estimated to be $2,000 per year. If the filtration system is not purchased, Aerotron Electronics will have to pay Bay City $12,000 per year for water purification. If the system is purchased, no water purification from Bay City will be needed. Aerotron Electronics must borrow half of the purchase price, but they cannot start repaying the loan for 2 years. The bank has agreed to three equal annual payments, with the first payment due at the end of year 2. The loan interest rate is 8 percent compounded annually. Aerotron Electronics' MARR is 10 percent compounded annually.

a.  What is this investment's external rate of return?
b.  What is the decision rule for judging the attractiveness of investments based on external rate of return?
c.  Should Aerotron Electronics buy the water filtration system?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Civil Engineering) Materials
Find the required diameter of the force main PA, (dPA), if the pressure at point A is not allowed to drop below 370 kPa. Determine the required diameter of pipe BC, (dBC), if
The coal has an ash content of 12% by mass. Forty percent of the ash falls out the bottom of the furnace. The rest of the ash is carried out of the furnace with the hot gase
a) What was the discharge capacity andvelocity at full flow at the time of installation b) If the pipe presently carries a flow of15 cfs when full, determine the present veloc
The flowrate Q over a rectangular sharp crested weir depends on the width of the notch b, the head on the weir H, and the acceleration due to gravity g. Find how many dimens
The self-regulating floodgate ABC, pinned at B, is pressed against the lip of the spillway at C by the action of the 3645-lb weight A. If the gate is to open when the water
The first stratum is confined, and the second one is unconfined, and the water surface elevations in the channels are 24 m and 16 m above the bottom of the unconfined aquife
At a specified point on a highway, vehicles are known to arrive according to a Poisson process. Vehicles are counted in 20-second intervals, and vehicle counts are taken in
Write a user friendly computer program to design torsion reinforcement in rectangular and flanged beams, and plot the cross-sectional reinforcement details on a graphic plot