Question
Highpoint, Inc., is considering investing inautomated equipment with a ten-year useful life. Managers at Highpoint haveestimated the cash flows associated with the tangible costs and
Highpoint, Inc., is considering investing inautomated equipment with a ten-year useful life. Managers at Highpoint haveestimated the cash flows associated with the tangible costs and benefits of automation,but have been unable to estimate the cash flows associated with the intangiblebenefits. Using the company's 10% discount rate, the net present value of thecash flows associated with just the tangible costs and benefits is a negative $184,350.How large would the annual net cash inflows from the intangible benefits have to be tomake this a financially acceptable investment?
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