Question: An electronic device is available that will reduce this years labor costs by $8,000. The equipment is expected to last for 10 years. Labor costs

An electronic device is available that will reduce this year’s labor costs by $8,000. The equipment is expected to last for 10 years. Labor costs increase at a rate of 5% per year and the interest rate is 10% per year.
a. What is the maximum amount that we could justify spending for the device?
b. What is the uniform annual equivalent value (A) of the labor costs over the eight-year period?

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