Basics of Engineering Economy 2nd Edition by Anthony Tarquin,Leland Blank

Exercise 8

Brittany is co-oping this semester at Regency Aircraft, which customizes the interiors of private and corporate jets. Her first assignment is to develop the specifications for a new machine to cut, shape, and sew leather or vinyl covers and trims. The first cost is not easy to estimate due to many options, but the annual revenue and M O costs should net out at $15,000 per year over a 10-year life. Salvage is expected to be 20% of the first cost. Deter­mine what can be paid for the machine now to recover the cost and an MARR of 8% per year under two scenarios:
I: No outside revenue will be developed.
II: Outside contracting will occur with estimated revenue of $10,000 the first year, increasing by $5000 per year thereafter.
Solve using ( a ) bulated factors, and ( b ) spread­sheet and the GOAL SEEK tool.