Fundamentals of Engineering Economics 3rd Edition by Chan Park

Exercise 3

Autonumerics, Inc. has just invested $600,000 in a manufacturing process that is estimated to generate an after-tax annual cash flow of $250,000 in each of the next five years. At the end of year 5, no further market for the product and no salvage value for the manufacturing process are expected. If a manufacturing problem delays plant start-up for one year (leaving only four years of process life), what additional after-tax cash flow will be needed to maintain the same internal rate of return as if no delay had occurred?