Should the company

Part 5. The final part of the project is to help the company with the following Decision Situations: Decision Situation #1 - Equipment Purchase JDL Enterprises is considering the purchase a new automated equipment in the Memory Chip division to reduce labor cost. The equipment would cost $200,000 and have a useful life of 5 years. Over the next 5 years, it is estimated that they would save $60,000 in labor costs per year. Since the labor savings would occur in the future, you should use time value of money techniques to find the Present Value of the labor savings, and then compare it to the price of the equipment to determine if this would be a good investment. The company uses a 10% rate of return to evaluate any capital projects. Create an Excel spreadsheet with the following information: $60,000 Enter the annual labor cost savings 5 Enter the number of Years 10% Enter the time value of money rate The present value of labor savings is -@PV(rate, periods, annuity amount) The cost of the Equipment $200,000 The Net Present Value is Present Value of Savings minus Cost Conclusion: Should the Company purchase the Equipment? Explain