Industrial Systems, Inc. consolidated its manufacturing lines into smaller lines to create more flexibility. To create the new lines, the company borrowed $59863 at an interest rate of 4% compounded annually to be repaid back in 7 years. The company makes a loan payment at the end of each year.

The new manufacturing lines required employee re-training at an initial annual cost of $56548 with costs decreasing by 13% each subsequent year. The company paid for training for 3 years.

Costs associated with the new line are $118388 annually. At first, as the company began doing things in different ways, savings were minimal. By the end of year 4, the company saw annual savings of $332491 which increased by $57405 each subsequent year.

Calculate the equivalent uniform annual worth (EUAW) of the new lines over 20 years using a MARR of 7% compounded annually.

Notes:

The loan interest is at a different interest rate than our MARR. How will this affect the problem?

Count the years carefully for the savings