4. Gigi Marvin, a young manufacturing engineer, prepared an economic analysis for some equipment to...
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4. Gigi Marvin, a young manufacturing engineer, prepared an economic analysis for some equipment to replace one production worker. The analysis showed that the present worth of the benefits (of employing one less production worker) just equaled the present worth of the equipment costs, assuming a 10-year useful life for the equipment. It was decided not to buy the equipment. A short time later, the production workers union won a new 3-year contract that granted them an immediate $0.40/hr wage increase, plus an additional S0.25/hr wage increase in each of the two subsequent years. Gigi has been asked to revise her earlier analysis. Assuming an 8% MARR, by how much will the present worth of replacing one production worker increase? Assume the plant operates a single 8-hr shift, 250 days per year.m
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