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Hornblower Industries is in the business of building ships. They have been analyzing the purchase of a new automated laser welder. The welder has a
Hornblower Industries is in the business of building ships. They have been analyzing the purchase of a new automated laser welder. The welder has a cost of $400,000 and would cost another $100,000 for setup and programming. Hornblower will have to maintain a new inventory of spare parts, which will require an investment of $50,000. They do not believe that the welder will generate any additional revenue but estimate that it will save $150,000 per year in labor and materials. The welder has a useful life of five years and will be depreciated straight-line to a zero salvage value. The welder is expected to actually be sold for $125,000 at the end of five
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