The textile factory is being upgraded. The expectation is that labor costs will decrease at an annual rate of 5% while overhead costs will increase at 8%. Now by the end of the first year the Labor...

The textile factory is being upgraded. The expectation is that labor costs will decrease at an annual rate of 5% while overhead costs will increase at 8%.

Now by the end of the first year the

    Labor costs $2million

    Material costs $3 million

    Overhead costs 1.6 million

The time value of money rate is 11% and the time horizon is 7 years.

    Determine the dollar value for each cost category (labor, material, overhead) for each year and the total cost for each year.

    Determine the present worth of each cost category and the total cost.

    Determine the annual worth over 7 years that is equivalent to the present worth of the total cost.