Consider the following scenario: An engineering firm is considering switching from a manual to an automated machine for quality control. Under the current process:

1.Manual inspection:

a.Works earn $35/ hour, inspect 7 items per hour and need 16 inspectors total, working 8 hours per shift and 200 shifts a year

b.There is a false negative of 15%, so the company actually pays workers $25/hr and sets aside $10/hr to cover cost of poor quality (considered a regular business expense)

2.Proposed automated inspection:

a.Capital cost of machine is $17 million (it is available in 2 months)

b.Cost of shipping machine would be $50,000

c.Installation/modifications of machine into warehouse is $130,000

d.Operating costs are estimated to be "minor"

e.Inspection cost for management to observe machine prior to purchase is $5,000

f.Automated process has a false negative rate of 2%

For both processes:

1.The firm sells 170,000 items a year at $75 each

2.Use a planning horizon of 4 years and a corporate MARR of 12% (MARR = minimum attractive rate of return)

3.Do not consider taxes in the analysis

-Based on the above considerations, what should the company do & why?