Required: 1) Ignoring present value concepts, what are the annual net cost savings if BPG further automates their production for horse feed? 2) Create a table showing the total initial cash flows for the investment in equipment, as well as all changes in cash flows for years one through five. 3) Summarize the net present value of all cost, comparing the cost of expanding automation to the cost of 25,000 labor hours. Given the net present value of the two alternatives, should BPG expand automation to the horse feed operation? Discuss your results. This discussion is well beyond just the numbers... what do these results mean? How will accepting or rejecting this project affect the company's future (discuss all aspects of the change, not just cost)? 5) How are your results affected if BPG only requires a 12% return on any new investments in production? The case is due Friday, April 22nd, and must be submitted in a single Word file. Multiple files or files in other formats will not be accepted. Submit your case file as an attachment through Canvas email. Please remember to put your name on the submitted case.Assessing the Expansion of Automation w. 'IM .,7, During the semester we learned about present values and present values of annuities. These tools can be applied to a variety of business and personal decisions such as mortgages, car loans, long term budgets, and analyzing the present value of a project's future cash ow in today's terms. One of a company's rst steps in deciding whether or not to move forward any changes is analyzing the proposals present value of all future cash flows in and out of the business. Below is a proposal assessment case requiring the use of present value tools. The case discussion is followed by specific requirements. Replacing Labor with Automation Jack McGuire has been with Bulk Productions Group (BPG) for 14 years. BPG produces a variety of custom live stock feeds used in the agricultural industry. He was recently promoted to plant controller at BGP's Midwest facility located in Ithaca, Michigan. During his rst week in the Ithaca plant he began to analyze the cost efciencies of the current level direct labor and automation costs at BPG's production site. McGuire decides to start slow with a project testing the increased automation of their horse feed line. Below are the projected cost of the expansion in automation, given a 5 year useful life of the robotic equipment: Cost of Automation Purchase price of new robotic equipment $1,450,000 Sales tax on equipment $87,000 Shipping cost of equipment $63,000 Equipment installation $175,000 Software $98,000 Initial system and equipment testing $25,000 Equipment scrap value after ve years $70,000 ' unual Warranty Service Contract $21,000 Other information: 1) The robotics proposal will eliminate one plant supervisor position with a salary of $98,000 per year. 2) Two machine maintenance workers will need to be hired at a salary of $41,000 each. 3) The automation and related electronics will increase energy usage by $126,000 per year. 4) The software will create an expected savings of $210,000 per year due to a reduction in inventory spoilage. 5) Automation efciencies will create a one-time $150,000 cost reduction in BPG's inventory stored in their warehouse. 6) Automation will replace 25,000 labor hours costing $16 per hour. 7) BPG's International Home Office in Cedar Rapids, Iowa expects a 16% return on any new investments in production