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Marginal cost - benefit analysis and the goal of the firm Ken Allen, capital budgeting analyst for Bally Gears, Inc., has been asked to evaluate
Marginal costbenefit analysis and the goal of the firm Ken Allen, capital budgeting analyst for Bally Gears, Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics used on the heavy truck gear line will produce total benefits of $in today's dollars over the next years. The existing robotics would produce benefits of $also in today's dollars over that same time period. An initial cash investment of $ would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $ Show how Ken will apply marginal costbenefit analysis techniques to determine the following:
a The marginal benefits of the proposed new robotics.
b The marginal cost of the proposed new robotics.
c The net benefit of the proposed new robotics.
d What should Ken recommend that the company do Why?
e What factors besides the costs and benefits should be considered before the final decision is made?
a The marginal added benefits of the proposed new robotics is $ Round to the nearest dollar.
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