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Redbird Inc. is considering the purchase of a robot for use on the company's assembly line. Selected data relating to the robot are provided below:
Redbird Inc. is considering the purchase of a robot for use on the company's assembly line. Selected data relating to the robot are provided below: Purchase price of the robot The annual savings in labor costs $1,200,000 ? The annual increase in power and maintenance costs $37,500 Salvage value in 5 years Useful life $70,000 5 years Engineering studies suggest that the use of the robot will result in a savings of 23,000 direct labor hours each year. The labor rate is $16 per hour. The Redbird has a 10% required rate of return. 1. If the company purchases the robot, what will the annual net saving in $ be? (Hint: Do not include the one-time purchase price/installation, or salvage value; no rounding is needed.) 2. What is the net present value of the proposed investment in the robot in $? (Do not round your intermediate calculations. Round your final answer to the nearest integer.)
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