3) (15 points) A company is considering installation of an automated inspection machine. The machine will cost $150,000 and can be depreciated using MACRS (5 year recovery). The new process will allow labor savings of 2500hr/year. The cost of labor is $35/hr. The life of this project is 3 years and at the end of year three the machinery can be sold for $20,000. Is the project justified if the tax rate is 30% and the discount rate is 10%? 10 Year 1 MODIFIED ACRS FACTORS Recovery Period (Years) 3 5 7 Recovery Rate (Percent) 33.3 20.0 14.3 44.5 I 32.0 I 24.5 14.8 19.2 17.5 7.4 I 11.5 12.5 11.5 8.9 I 5.8 I 8.9 8.9 4.5 I 3 4 5 6 I 7 8 9 10.0 18.0 14.4 11.5 9.2 7.4 6.6 6.6 6.5 6.5 10 3.3