Answer 1:
Annual net cost savings = Annual saving due to replacement of six welders + Annual reduction in material wastage - Annual maintenance cost
= 116000 + 7700 - 50400
=$73,300
Answer 2 (a):
Working:
Answer 2(b):
No
NPV is negative and hence purchase of automatic welding machine is not recommended.
Answer 3:
Working:
NPV = - $103,568.06
PV factor for $1 annuity for 6 years at 13% rate = 3.99755
Minimum dollar value of intangible benefits = 103,568.06 / 3.99755 = $25,908
Please show work, thank you "I'm not sure we should lay out $310,000 for that automated...
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