The plant manager of Shenzhen Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will

cost $$270,000.$ The manager believes that the new investment will result in direct labor savings of $$54,000$ per year for $10$ years.

Present Value of an Annuity of $$1$ at Compound Interest

a$.$ What is the payback period on this project?

years

b$.$ What is the net present value, assuming a $12\%$ rate of return? Use the table provided above. Round to the nearest whole dollar.

Net present value

$

c$.$ What else should the manager consider in the analysis?

Taxes and Maintenance costs