Winston Specialties is upgrading its manufacturing line. The initial cost will be $172722. The manufacturing line will have yearly maintenance costs of $22074 which will increase each year by 14%. When the line is fully up and running at the end of year 2, the revenue will be $88352 per year, with revenue increasing by $15322 each subsequent year. The line will have an overhaul at the end of year 9 at a cost of $59801. The manufacturing line has a useful life of 16 years and a salvage value of $28125.
Using an interest rate of 2%, compounded annually, calculate the present worth of the manufacturing line.
Note: The first year of revenue will occur at the end of year 2
Hint: Carefully count the years when calculating the revenue