"I'm not sure we should lay out $350,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $94,000 for software and installation, and another $60.000 per year just to maintain the thing. In addition, the manufacturer admits it would cost $57,000 more at the end of three years to replace wom-out parts." " 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 $124.000 per year. And we would save another $8,500 per year in reduced material waste When you figure that the automated welder would last for six years. I'm sure the return would be greater than our 15% required rate of return "I'm still not convinced countered Mr. Alder. "We can only get $22,000 scrap value out of our old welding equipment if we sell it now, and in six years the new machine will only be worth $40,000 for parts. But have your people work up the figures and we'll talk about them at the executive committee meeting tomorrow." Click here to view Exhibit 14B-1 and Exhibit 148-2, to determine the appropriate discount factor(s) using tables Required: 1. Compute the annual net cost savings promised by the automated welding machine 2a Using the data from Required 1 and other data from the problem. compute the automated welding machine's net present value 2b. Would you recommend purchasing the automated welding machine? 3. Assume that management can identify several intangible benefits associated with the automated welding machine, including 3. Assume that management can identify several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another, improved quality of output, and faster delivery as a result of reduced throughput time. What minimum dollar value per year would management have to attech to these intangible benefits in order to make the new welding machine an acceptable investment? Complete this question by entering your answers in the tabs below. Req: Reg 2A Reg 26 Req3 Compute the annual net cost savings promised by the automated welding machine. Annual nel cost savings Rest Req2A > 2. Assume that management can Identity several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another improved quality of output, and faster delivery as a result of reduced throughput time. Whet minimum dollar value per year would management have to attach to these intangible benefits in order to make the new welding machine an acceptable investment? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 28 Req3 Using the data from Required 1 and other data from the problem, compute the automated welding machine's net present value. (Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.) Nurl present value 3. Assume that management can identify several Intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another improved quality of output, and faster delivery as a result of reduced throughput time. What minimum dollar value per year would management have to attach to these intangible benefits in order to make the new welding machine an acceptable investment? Complete this question by entering your answers in the tabs below. Req1 Req 2A Reg 26 Rega Would you recommend purchasing the automated welding machine? OYes ONO Sassume that management can identify several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another. Improved quality of output, and faster delivery as a result of reduced throughput time. What minimum dollar value per year would management have to attach to these intangible benefits in order to make the new welding machine an acceptable investment? Complete this question by entering your answers in the tabs below. Ret Reg 2A Reg 21 Reg) Assume that management can identify several intangible benefits associated with the automated welding machine, including greater flexibility in shifting from one type of product to another, improved quality of output, and faster delivery as a result of reduced throughput time. What minimum dollar value per year would management have to attach to these intangible benefits in order to make the new welding machine an acceptable investment? (Round your final answer to the nearest whole dollar amount) Show less Minimum dollar value of intangible benefits
