Question

PCM Thermal Products uses austenitic nickel-chromium alloys to manufacture resistance heating wire. The company is considering a new annealing-drawing process to reduce costs. If the new process will cost $3.25 million dollars now, how much must be saved each year to recover the investment in 6 years at an interest rate of 15% per year

Answer 1

the amount that need to be saved each year in order to recover the investment is $858,770

Step-by-step explanation:

The computation of the amount saved each year is shown below:

= Costing of the new process × (A/P, 15%, 6)

= $3,250,000 × 0.26424

= $858,770

hence, the amount that need to be saved each year in order to recover the investment is $858,770