Answer to number 5

4. (25 points) The company you work for is considering automating a process with a robot that is now done manually. The current cost of labor for this process is $50,000/year. If you automate the labor will fall to $10,000/yr, but you will have an additional $5000/yr for maintenance costs. The robot costs $100,000 and is depreciated using a 7-year recovery period. The project will only last for 5 years at which time you will sell the robot for $10,000. Use a 28% tax rate and calculate the cashflow for each year of the 5-year project. Payback 5. (5 points) What is the Payback for the investment in problem 4