Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 39

A company that manufactures high-speed submersible rotary indexing spindles is considering upgrading the production equipment to reduce costs over a 6-year planning horizon. The company can invest $80,000 now, 1 year from now, or 2 years from now. Depending on when the investment is made, the savings will vary. That is, the savings will be $25,000, $26,000, or $29,000 per year if the investment is made now (year 0), in 1 year, or in 2 years, respectively. Will the timing of the investment affect the request to make at least a 20% per year return Use future worth analysis.