Bullard Company (BC) is considering expanding its range of industrial machinery products by manufacturing machine tables, saddles, machine bases, and other similar parts. Several combinations of new equipment and personnel could serve to fulfill this new function.

Option 1 (M1): New machining center with three operators.

Design 2 (M2): New machining center with an automatic pallet changer and two task-sharing operators.

Each of these arrangements incurs different costs and revenues. The time taken to load and unload parts is reduced in the pallet-changer cases. Certainly, it cost more to acquire, install, and tool-fit pallet changer, but because the device is more efficient and versatile, it can generate larger annual revenues. Although saving on labor costs, task-sharing operators take longer to train and are more inefficient initially.

As the operators become more experienced at their task and get used to collaborating with each other, it is expected that the annual benefits will increase by 13% per year over five years. Then, the revenues will be constant for five more years, completing the ten-year study period. BC has estimated the investment cost and additional revenues as in the following table. Do nothing is obviously an option, since BC will not undertake this expansion if none of the proposed methods is economically viable. If a method is chosen, BC expects to operate the machining center over the next ten years.ince B

Questions a) Compute the NPW and IRR for both options at MARR =12%. b) Based on the metrics computed in question a, which option would be selected? c) BC is considering financing 40% of the project's initial investment at an interest rate of 9% compounded monthly. If BC pays annual installments and the required repayment period is 10 years, determine the loan amortization schedule. Note: use the project selected in question a. Questions a) Compute the NPW and IRR for both options at MARR =12%. b) Based on the metrics computed in question a, which option would be selected? c) BC is considering financing 40% of the project's initial investment at an interest rate of 9% compounded monthly. If BC pays annual installments and the required repayment period is 10 years, determine the loan amortization schedule. Note: use the project selected in question a