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A manufacturer is considering changing its process in order to reduce pollution emissions. Production will remain the same. The current process has an annual operating cost of $850,000 and an annual waste disposal cost of $150,000. The new process would have an annual operating cost of $700,000 and a waste disposal cost of $85,000. Presently it will cost $300,000 to modify the existing process line to effect these changes. Based on the present worth, and assuming an 8% discount rate and a five year life, does it make economic sense to make the process line changes?

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Financial Accounting, Accounting

Category:- Financial Accounting
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