BC Ferries make initial investment of $140,000 to buy a robotic arm for their assembly line. The robot is to be implemented in the production line for automatic welding. The projected cash benefits over the projects four-year life are as follows: $32,500 by the end of year 1; $41,000 by the end of year 2; $54,800 by the end of year 3; and $66,000 by the end of year 4.

a) Identify the break-even interest rate for this project

b) The firms MARR is considered 12%.

Evaluate the economic merit of this investment. Suppose the robot will be operated 288 hours per month. What would be the equivalent savings per robot hour? On a separate quality control production line, the purchased robot will be implemented with operation time as follows: 288 hours per month during year 1, 244 hours per month during year 2, 222 hours per month during year 3, and 200 hours per month during year 4. What is the equivalent savings per robot hour?