Question

Eddie is a production engineer for a major supplier of component parts for cars. He has determined that a robot can be installed on the production line to replace one employee. The employee earns $20 per hour and benefits worth $8 per hour for a total annual cost of $58,240 this year. Eddie estimates this cost will increase 6% each year. The robot will cost $16,500 to operate for the first year with costs increasing by $1500 each year. The firm uses an interest rate of 15% and a 10-year planning horizon. The robot costs $75,000 installed and will have a salvage value of $5000 after 10 years. Should Eddie recommend that purchase of the robot? Contributed by Paul R. McCright, University of South Florida

Answer 1

PPO Statement showing Pu of Cash Outflow 87 Men ON R factor 0.870 dmshoto 58240 16500 61734, 4 18000 (5438.5 19540 69365 2000 73527 | 22500 77.938 24000 82615 | 26500 187571 92821 | 29500 30000 0.656 0572 10.497 PiN of Men Pu of Robot 715000 150668.8 | 14355 40671 113600 142928 112792 39676 78 / 1202 36543 | 11183 33669 120368 31063,249588 28615.718829 26363 8ogy 24303 57410 1 0.432 0376 0-24 703 94395 15000) 0.247 0.247 1(239) 360522 182004 the cast of Robot installation & running for to years i less than the cast of employee for loyeurs Thurg Ruchess of Rebet is bronficial