I'm not sure we should lay out $235,000 for that automated welding machine, said Jim Alder president of the Superior Equipment Company. Thats a lot of money, and it would cost us $76,000 for software and installation, and another $3,200 every month just to maintain the thing. In addition, the partsh it would cost every month just to I admit it's a lot of money, said Franci Rogers, the controller. "But you know the turnover problem we've had with the welding crew. This machine would replace six welders at a cost savings of $106,000 er year. And we would save another $6,700 per year in reduced matenal waste. when you ngure that the automated welder would last for six years, I'm sure the retum would be greater than our 15% automated welder would last for six years, I'm sure the return would be greater than our 1 required rate of return I'm still not convinced," countered Mr. Alder. "We can only get $13,000 scrap value out of our old welding equipment if we sell it now and in six years the new machine will only be worth $22,000 for parts. But have your people work up the fgures and we'll talk about them at the executve commitee meeting tomorrow. Click here to view Exhibit 13B-1 and Exhibit 138-2 to determine the appropriate discount factor() using tables. Required: 1. Compute the annual net cost savings promised by the automated welding machine Reduction in labor costs Reduction in material waste Total Less increased maintenance costS Annual net cost savings