Question
Megatronics is considering purchasing a robotic chip inserting machine to be used in the production of computer motherboards. The machine would cost $5,340,000. The expected
Megatronics is considering purchasing a robotic chip inserting machine to be used in the production of computer motherboards. The machine would cost $5,340,000. The expected revenues to be generated from the chip inserting machine (because motherboards can now be produced more quickly and with fewer defects) are listed below. In addition, every two years, Megatronics will have to spend $50,000 to replace the robot arm wiring. These costs are shown below as well. If Megatronics has a 5-year payback requirement, should the machine be purchased?
Year | Revenues | Additional Costs at beginning of specific years |
1 | $1,800,000 |
|
2 | $2,000,000 | $50,000 |
3 | $1,065,000 |
|
4 | $2,530,000 | $50,000 |
5 | $1,430,000 |
|
6 | $2,650,000 | $50,000 |
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