The system will save per year labor and materials

Q.3.

Consider a situation, where (a) the equal-payment cash flow of $1,500 in constant dollars over ten years is converted from the (b) equal-payment cash flow in actual dollars over 10 years at an annual general inflation rate = 4% and i = 10%. What is the amount A in actual dollars equivalent to A' = $1,500 in constant dollars?

Delaware Chemicals is considering the installation of a computer process control system in one of its processing plants. This plant is used for 3,000 operating hours per year, to produce a proprietary demulsification chemical. The annual production of the demulsification chemical amounts to 25,000 kilograms per year, and it sells for $10 per kilogram. The proposed computer process control system will cost $150,000 and is expected to provide specific benefits in the production of the demulsification chemical as follows:

A bi-level mall is under construction. Installation of only 10 escalators is planned at the start although the ultimate design calls for 16. The question arises whether to provide necessary facilities that would permit the installation of the additional escalators (e.g., stair supports, wiring conduits, and motor foundations) at the mere cost of their purchase and installation now or to defer investment in these facilities until the escalators need to be installed. The two options are detailed as follows: