1. By installing some elaborate inspection equipment on its assembly line, the R
ID: 2362865 • Letter: 1
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1. By installing some elaborate inspection equipment on its assembly line, the Robot Corp. can avoid hiring an extra worker who would have earned $26,000 a year in wages and an additional $7500 a year in employee benefits. The inspection equipment has a 6-year useful life and no salvage value. Use a nominal 18% interest rate in your calculations. How much can Robot afford to pay for the equipment if the wages and worker benefits would have been paid a) At the end of each year b) monthly 2. Two different companies are offering a punch press for sale. Company A charges $250,000 to deliver and install the device. Company A has estimated that the machine will have maintenance and operating costs of $4000 a year and will provide an annual benefit of $89,000. Company B charges $205,000 to deliver and install the device. Company B has estimated maintenance and operating costs of the press at $4300 a year, with an annual benefit of $86,000. Both machines will last 5 years and can be sold for $15,000 for the scrap metal. Use an interest rate of 12%. Which machine should your company buy?? Please help me out here thanks!Explanation / Answer
1)total savings is 2600+7500=3350$ calculating it for 18% and for 6 years the savings would be a sum of 3618$ apart from the base savings.. of 3350$..!! at the end of each year it wud be 603$ monthly is 603/12=$50.2 2)estimated spending on the machine for company A for 5 years is 250000+5*4000=270,000$ amount recieved due to machine is 89,000*5+15,000=$460,000 excluding the interest estimated spending on the machine for company B for 5 years is 205000+5*4300=226,500$ amount recieved due to machine is 86,000*5+15,000=$445,000 excluding the interest inclusive of interest for "A" 460,000-250,000*12%=430,000 inclusive of interest for "B" 445,000-205,000*12%=420,400 difference is $10,000..
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