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3.1. As part of its expanded business plan Whammit Stamping Company is purchasing a new...

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Accounting

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3.1. As part of its expanded business plan Whammit Stamping Company is purchasing a new custom labelling machine to apply corporate logos to plastic cups used for promotional marketing. The labelling machine costs $50,000. In addition to its acquisition cost, the maintenance cost of the new machine is expected to be $500 the first year, $550 the second year, $600 the third year, increasing at a rate of $50 per year. A $5,000 refurbishment will be needed at the end of years 4 and 8. The salvage value of the machine at the end of its 11-year service life is $3,000. At an interest rate of 12% per year compounded annually, compute the present worth (PW) of the machine (15-points)

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