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Nike Manufacturing is considering the purchase of an automated parts handler for the assembly and test area of its Philadelphia, PA , plant. The handler

Nike Manufacturing is considering the purchase of an automated parts handler for the assembly and test area of its Philadelphia, PA, plant. The handler
will cost $250,000 to purchase and another $10,000 to install. If the company undertakes the investment, it will automate part of the semiconductor
and test area, reducing operating costs by $70,000 per year for the next ten years. Five years into the life of the project, however, Nike will have to
spend an additional $100,000 to update and refurbish the handler. The handler will be depreciated straight-line to zero over 10 years, and the
additional investment (refurbishing costs) will also be depreciated straight-line to zero over the last 5 years of the project. After 10 years, the handler is
expected to be worth $5,000 to a buyer of these used machines. Bobloblaw's tax rate is 30% and its opportunity cost of capital is 12%. Answer the
following questions:
a) Is this a good project for Bobloblaw? Explain your answer.
b) Create a data table and graph showing how NPV changes with the discount rate (sometimes called an NPV profile). What can you tell about the
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