Question

In: Economics

4. SD Wheel Corporation spent $30,000 on a new piece of lug-nut measuring equipment, which resulted...

4. SD Wheel Corporation spent $30,000 on a new piece of lug-nut measuring equipment, which resulted in a savings of $4,202 per year. The length of time it should take to recover the investment at 8% per year is closest to:

(a) Less than 6 years (b) 7 years (c) 9 years (d) 11 years

Solutions

Expert Solution

Correct option :(d) 11 years

The given data is executed in an excel:

Here the initial investment is recovered in almost 11 years, because the cumulative amount is almost close to zero, i.e -$2.07 in the end of 11th year.

The excel calculation and formula used are shown below:


Please don't forget to rate the answer if its helpful, thank you.

Rahul Sunny answered 1 year ago
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