1. To automatically insert electronic components in printed circuit boards for a cell phone production line, a $500,000 surface mount placement

(SMP) machine is being evaluated by a manufacturing engineer. Over the 10-year planning horizon, it is estimated that the SMP machine will produce annual after-tax cost savings of $92,500. The engineer estimates the machine will be worth $50,000 at the end of the 10-year period.

Based on the fi rm’s 10 percent after-tax MARR, should the investment be made?

Transcribed Image Text:

(+) (-) $500,000 $50,000 $92,500 $92,500 $92,500 $92,500 $92,500 $92,500 $92,500 $92,500 $92,500 $92,500 2 3 4 5 6 7 8 9 10