30. The Tallahassee Motor Company is thinking of automating one of its production facilities. The equipment required will cost a total of $10 million and is expected to last 10 years. The company’s cost of capital is 9%. The project’s benefits include labor savings and a quality improvement that will lower warranty costs.

Savings are estimated as follows.

a. Use the program developed in the previous problem to find the project’s NPV.
Is the project acceptable?

b. Use the program to develop the data for an NPV profile. Evaluate the NPV for interest rates (costs of capital) from 6% to 14%.

c. Use the program to iteratively find the project’s IRR to one hundredth of a percent.

Transcribed Image Text:

Year 1234 Cost Savings ($000) $ 574 864 1,246 2,748 5 3,367 6 2,437 7 2,276 8 1,839 10 86 9 1,264 623