Question

2. [10] The XYZ Company has been involved in development of an automated resistance welding line. The new welding system costs $150,000, but it is expected to save $50,000 per year in labor costs. However, the welding system must be overhauled every three years at a cost of $65,000, and a new set of robots arms must be purchased and installed every four years at a cost of $20,000 each time. If the welding system is expected to last only twelve years, draw the cash flow diagram. At the end of the twelve year life, the equipment should be worth good money because the robots can be rebuilt and sold as re- manufactured. They can be sold for $45,000 but it costs $10,000 to recondition them for that sale. Be sure to avoid showing cash flows that do not need to be spent. Please draw the cash flow diagram. your boer en sy of 50k hole sol de sole table dok toe we use Aste #150,000

Answer 1

Cash flow diagram has been presented below

2 7 10 11 12 0 -150000 3 -65000 50000 4 -20000 50000 6 -65000 50000 8 -20000 | 50000 9 -65000 50000 50000 50000 50000 50000 50000 50000 Year Cash outflow Saving in Labour cost Cost to Repair(Outflow) Sale proceeds (Inflow) Net Cash flow 50000 -10000 45000 85000 -150000 50000 50000 -15000 30000 50000 -15000 50000 30000 -15000 50000 50000