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(10 pts) 3. Brockville Brackets (BB) has a three-year-old robot that welds small brackets onto car-frame assemblies. At the time the robot was purchased, it cost $300 000 and an additional S50 000 was spent on installation. BB acquired the robot as part of an eight-year contract to produce the car-frame assemblies. The useful life of the robot is 12 years, and its value is estimated to decline by 20 percent of current value per year, as shown in Table 1. Operating and maintenance costs estimated when the robot was purchased are also shown in the table. BB has found that the operating and maintenance costs for the robot have been higher than anticipated. At the end of the third year, new estimates of the operating and maintenance costs are shown in Table 2. BB has determined that the reason the operating and maintenance costs were in error was that the robot was positioned too close to existing equipment for the mechanics to repair it easily and quickly. BB is considering moving the robot farther away from some adjacent equipment so that mechanics can get easier access for repairs. To move the robot will cause BB to lose valuable production time, which is estimated to have a cost of $25 000. However, once complete, the move will lower maintenance costs to what had originally been expected for the remainder of the contract (e.g., 540 000 for the fourth year, increasing by 10 percent per year thereafter). Moving the robot will not affect its salvage value. A. If BB uses a MARR of 15 percent, should it move the robot? If so, when? (Remember that the contract exists only for a further five years.) Table 1. Defender, When New Life (Years) Salvage Value Operating and Maintenance Costs 240.000 40,000 122.50 40,000 $300.000 0 1 2 3 4 5 192.000 15300 40.000 44.000 7 3 51.340 $8.564 9.304 7643 62.915 50:32 40.265 32.212 25,770 20616 10 11 12 70,662 77.919 Table 2. Costs for Three-Year-Old Defender Additional Salvage Value Operating and Life (Yan Maintenance Comes SI51.000 550.000 35.00 7,613 122.50 9,104 1 2 3 4 62.915 $0,332 60.500 665 21.305 (10 pts) 3. Brockville Brackets (BB) has a three-year-old robot that welds small brackets onto car-frame assemblies. At the time the robot was purchased, it cost $300 000 and an additional S50 000 was spent on installation. BB acquired the robot as part of an eight-year contract to produce the car-frame assemblies. The useful life of the robot is 12 years, and its value is estimated to decline by 20 percent of current value per year, as shown in Table 1. Operating and maintenance costs estimated when the robot was purchased are also shown in the table. BB has found that the operating and maintenance costs for the robot have been higher than anticipated. At the end of the third year, new estimates of the operating and maintenance costs are shown in Table 2. BB has determined that the reason the operating and maintenance costs were in error was that the robot was positioned too close to existing equipment for the mechanics to repair it easily and quickly. BB is considering moving the robot farther away from some adjacent equipment so that mechanics can get easier access for repairs. To move the robot will cause BB to lose valuable production time, which is estimated to have a cost of $25 000. However, once complete, the move will lower maintenance costs to what had originally been expected for the remainder of the contract (e.g., 540 000 for the fourth year, increasing by 10 percent per year thereafter). Moving the robot will not affect its salvage value. A. If BB uses a MARR of 15 percent, should it move the robot? If so, when? (Remember that the contract exists only for a further five years.) Table 1. Defender, When New Life (Years) Salvage Value Operating and Maintenance Costs 240.000 40,000 122.50 40,000 $300.000 0 1 2 3 4 5 192.000 15300 40.000 44.000 7 3 51.340 $8.564 9.304 7643 62.915 50:32 40.265 32.212 25,770 20616 10 11 12 70,662 77.919 Table 2. Costs for Three-Year-Old Defender Additional Salvage Value Operating and Life (Yan Maintenance Comes SI51.000 550.000 35.00 7,613 122.50 9,104 1 2 3 4 62.915 $0,332 60.500 665 21.305
