Question #74223

Lightco Corpn. has just replaced its production machinery with new, more efficient equipment that will reduce annual production costs by 5 Million per year. The cost of the new machines is 288 Million. if the firm uses a discount rate of 8 percent per year, how many years will it take for the firm to recoup its investment?

Expert's answer

Annual economic effect:

5 – 0,08*288 = -18.04 (million).

Number of years that will recoup the investment:

288/18.04 ≈ 16 (years).

5 – 0,08*288 = -18.04 (million).

Number of years that will recoup the investment:

288/18.04 ≈ 16 (years).

## Comments

## Leave a comment