Toro Company is expanding its El Paso plastic molding plant as it continues to transfer work from Juarez, Mexico contractors.
The plant bought a $1.1 million precision injection molding machine to make plastic parts for Toro lawn mowers, trimmers, and snow blowers.
The plant also spent $275,000 for three smaller plastic injection molding machines to make plastic parts for a new line of sprinkler systems.
The plant expects to hire 13 people, including some engineers for the expansion. If the average loaded cost (i.e., including benefits) of each employee is $100,000 per year, determine the annual worth of the new systems over a five-year planning period at an interest rate of 10% per year. Assume a 25% salvage value for the new equipment.
a) Write the standard notation
b) Write the formula substituting values from the interest factor tables.
c) Give the correct AW value using the correct units
d) Use Excel to verify your answer