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Fast PC, Inc., is considering a new automated assembly line to automate assembly of tablets. The new line can be installed for $12,450,000 today and will have a life of 7 years until technological obsolescence. At the end of its 7 year life, its components will have a salvage value of $1,200,000, and it will cost $356,250 to have the line removed. The line will produce $5,275,000 additional sales capacity per year due to productivity gains. Additional technical labor cost will be $1,305,000 per year and operating and maintenance costs will be $442,500 per year. The company’s MARR for this project is 18.0%. Based on net present value estimate, do you recommend installing the automated assembly line? What is the equivalent uniform annual worth and IRR of the project?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M92198634

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