Assume that in this scenario, the 500 extra labour hours go towards the production of the Chile's Chivito sandwich. Find the NPV of the investment, and determine whether or not it would be worthwhile to invest in the breadmaker.

Appendix Sandwich Information Existing Chacarero Pambazo Beef Chorizo Cubana Delight Proposed Chile's Mediterranean Chivito Light 0.08 0.06 0.05 0.07 0.05 Labour per unit (hours) Estimated demand (units) Total labour hours 30,000 35,000 42,000 15,000 15,000 2,400 2,100 2,100 1,050 750 $9.50 $9.55 $9.00 $10.00 $8.00 (4.35) (4.55) (5.00) (4.85) (3.40) Sales price Direct materials Direct labour (1) Fixed overhead (2) Profit (0.96) (0.72) (0.60) ( (0.84) (0.60) (3.43) $0.76 (3.43) $0.85 (3.43) $(0.03) (3.43) $0.88 (3.43) $0.57 Note 1: Direct labour is based on a rate of $12 per hour. Note 2: Fixed overhead is applied on a per-unit basis of $3.43 per unit. Labour hours available Currently, there are 7,000 labour hours available annually for the production of sandwiches. Current production uses 6,600 hours. Bread Maker Opportunity EEC has obtained information on the BakersDream, a high-end commercial-grade bread maker. The BakersDream would replace the current equipment at EEC, requiring no additional counter space, and using less electricity. It would increase capacity by 500 hours. For the purpose of your analysis, assume these hours would be used to produce the sandwich option that was NOT PICKED in your previous analysis. The BakersDream costs $200,000. Installation and training are an additional $10,000. EEC can sell its old equipment for $4,000. Annual costs are expected to be as follows: Maintenance (1) $2,500 Depreciation (2) 8,200 Electrical (3) 4,000 Note 1: The BakersDream requires annual maintenance to be performed by the manufacturer or the warranty is void. Note 2: The Bakers Dream will be depreciated on a straight-line basis over 25 years, with no salvage value. Note 3: Electricity costs for the BakersDream are expected to be $4,000 per year. Electricity for the old equipment was $2,500 per year. EEC's rate of return is 6% for evaluation of projects. EEC's corporate tax rate is 25%. The present value of the tax shield for the Bakers Dream is $28,000