Question: A plant manager is not sure whether he will get the approval to buy new equipment for automating an engine assembly line now or at

A plant manager is not sure whether he will get the approval to buy new equipment for automating an engine assembly line now or at some future time within the next 3 years. In order to have the money whenever he is given the go-ahead, he has asked you to tell him what the equipment is likely to cost in each of the next 3 years. The cost of the equipment today is $300,000, and the MARR is 15% per year.

(a) How much will it cost at the end of years 1, 2, and 3 if the cost increases only by the inflation rate of 4% per year?

(b) What case is this from the descriptions in Section 14.3?

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