Question
A robot can be purchased and installed to automate an assembly operation at a software company. The gross income from this automated process are estimated
A robot can be purchased and installed to automate an assembly operation at a software company. The gross income from this automated process are estimated to be RM400,000 per year. The robot will cost RM800,000 with no market value at the end of its 10-year life. The robot, if required, will be depreciated using straight-line depreciation method. Maintenance and operation expenses of the robot are estimated to be RM256,000 per year. The company has an effective income tax of 40%. Invested capital must earn at least 8%after income taxes are taken into account. Evaluate this investment using appropriate method.
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