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A firm is considering whether to automate a certain process, using equipment requiring an initial investment of $10,000. The equipment will be in service for
A firm is considering whether to automate a certain process, using equipment requiring an initial investment of $10,000. The equipment will be in service for 12 years. The process will generate $4000 per year in receipts, and $1500 in disbursements. Assuming straight line depreciation with zero salvage after 10 years, an effective tax rate of 35%, and a MARR of 15%, what is the present worth of this investment? Should the firm automate the process?
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