Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Assume that United Technologies is evaluating a proposal to change the company's manual design system to a computer-aided design (CAD) system. The proposed system is
Assume that United Technologies is evaluating a proposal to change the company's manual design system to a computer-aided design (CAD) system. The proposed system is expected to save 10,000 design hours per year; an operating cost savings of $45 per hour. The annual cash expenditures of operating the CAD system are estimated to be $225,000. The CAD system requires an initial investment of $500,000. The estimated life of this system is five years with no salvage value. The tax rate is 40 percent, and United Technologies uses straight-line depreciation for tax purposes. United Technologies has a cost of capital of 20 percent. (a) Compute the annual after-tax cash flows related to the CAD project. $ 0 (b) Compute each of the following for the project: 1. Payback period. Round your answers to two decimal places. For example, enter 8.84 for 8.844 and 8.85 for 8.845. 0 years 2. Net present value. (Round answer to the nearest whole number.) $ 0
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started