Carlisle Company has been cited and must invest in equipment to reduce stack emi

Question

Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $18,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle's MARR is 10 percent/year. What is the annual worth of this investment? What is the decision rule for judging the attractiveness of investments based on annual worth? Is the filter economically justified? DuraTech Manufacturing is evaluating a process improvement project. The estimated receipts and disbursements

Explanation / Answer

a. Annual worth fo the project isequla ot the fine that it will the company from i.e. $ 18,500

b) Based on annual worthiness concept, it should be more than cost of the project + 10% MARR

75000 + 37500 = 112500

c) No, filter is not economically justified because 18500 *5 = 92500 which is less than 112500.

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---