2.19 American Gas Products manufactures a device called a Can-Emitor that empties the contents of old aerosol cans in 2 to 3 seconds. This eliminates the need to dispose of the cans as hazardous waste. If a paint manufacturing company can save $90,000 per year in waste disposal costs, how much could the company afford to spend now on the Can-Emitor if it wants to recover its investment in 3 years at an interest rate of 20% per year?
Present value=$90,000*Present value of annuity factor(20%,3)
which is equal to’
=$189,583.33(Approx)(please note that intermediate calculations have not been rounded off].