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Marginal cost-benefit analysis and the goal of the firm Ken Allen, capital budgoting analyst for Bally Gears, Inc., has boen asked to evaluate a proposal.
Marginal cost-benefit analysis and the goal of the firm Ken Allen, capital budgoting analyst for Bally Gears, Inc., has boen asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics usod on the hoavy truck goar line will produce total benefits of $553,000 (in fodays dollars) over the next 5 years. The existing robotes would produce bonofits of $379,000 (aiso in today's dollars) over that same time period An inital cash irrestment of $221,200 would be required to install the new equipment. The managor estimates that the existing robotics can be sold for $58,000. Show how Ken will apply margina? cost-benefit analysis techniques to determine the following: a. The marginal benolits of the proposed new robotics, b. The marginal cost of the proposed now robosics c. The net benefit of the propoeed new robosics. d. What should Ken tocommend that the company do? Why? e. What factors besides the costs and benefits should be considered before tho final decision is made? a. The marginal (addod) benefits of the proposed new robotics is 4 (Round to the nearest dellar.)
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