Labor production rate: 1 widget per hour

Labor cost: $12 per hour

Raw materials: $10 per widget

Monthly hours worked: 160

Monthly Fixed costs: $5000

Robot production rate: 1.5 widgets per hour

Maintenance cost: $2500 per month

Raw materials: $10 per widget

Monthly hours worked: 160

Monthly fixed costs: $5000

Robot's lifespan is 10 years 5% per annum cost of capital

Buyer will purchase as many widgets as can be supplied in batches of 960.

Supplier of raw material is in synch with the factory and delivers raw material for 960 widgets very time the production of a new batch begins, but supplier has to be paid immediately in cash.

The factory owner is thinking of replacing labor with the robot, which appears to be able to produce more widgets at a lower cost.

Question: How much should the widget factory be willing to pay for the robot?