Contributed by Hamed Kashani, Saeid Sadri, and Baabak Ashuri, Georgia Institute of Technology
A manufacturing firm spends $500,000 annually for a required safety inspection procedure on its production lines. A new monitoring technology would enable the company to eliminate the need for such inspection. If the interest rate is 10% per year, how much can the company afford to spend on this new technology?The company wants to recover its investment in 15 years.