EXCEL Complete probleman Unexcell Annual property taxes 47. Lb.2 & LO.3 (NPV; Pl; sensitivity analysis) Westside Warehouse is considering peengineering some production operations with automated equipment. The new equipment would have an initial cost of $5,000,000 including installation. The vendor has indicated that the equipment has an expected life of seven years with an estimated salvage value of $400,000. Estimates of annual labor savings and incremental costs associated with operating the new equipment follow. benannual labor cost savings (14 workers) $950,000 Annual maintenance costs 40,000 Annual property taxes 28,000 Annual insurance costs 44,000 a. Assuming the company's cost of capital is 6 percent, compute the NPV of the auto- mated equipment. (Ignore taxes.) b. Based on the NPV, should the company invest in the new equipment: Chapter 15 Capital Budgeting c. Compute the profitability index (Round to two decimal points.) d. Assume Westside's managers are ings. Calculate the minimum ann wity index for this potential investment. (Ignore taxes.) nagers are least confident of the estimates of labor cost sav- minimum annual labor savings that must be realized for the pro- ject to be financially acceptable. e. What other qualitative factors shoul investment