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7. Manager is planning to buy an industrial equipment to automate a production line which is currently manual. The automation equipment will cost you 300,000
7. Manager is planning to buy an industrial equipment to automate a production line which is currently manual. The automation equipment will cost you 300,000 dollars now. The Automation will result in revenues of 50,000 dollars/year by reducing the labor costs. Assuming the equipment can be sold at a salvage value of 40,000 dollars at the end of 10 years and the interest rate is 10%, what is the capital recovery cost (CR) of the equipment and should you buy it considering the revenues? 300,000 dollars Initial Cost Annual revenues (earnings) Salvage value at year 10 50,000 dollars/year 40,000 dollars a) b) CR= - 46316; Do Not Buy it CR=96316; Buy it CR=42632; Buy it CR=36840; Do Not Buy it CR=46316; Buy it Bo brak e
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