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TSM Manufacturing has estimated that the purchase of a robotic workstation costing $150,000 will re- duce the firm's manufacturing expenses by $12,500 per month during
TSM Manufacturing has estimated that the purchase of a robotic workstation costing $150,000 will re- duce the firm's manufacturing expenses by $12,500 per month during a two-year period. If the work- station has a zero salvage value in two years, what is the firm's expected annual rate of return on invest- ment? (Return on Investment or ROI is the equivalent interest rate that must be earned on the investment to produce the same income as the proposed project.) Hints: You should answer this question: what is the interest rate for which $150,000 today is equivalent to $12,500 per month for two years? Note that this is not any easy thing to calculate exactly, as you will learn if you set this up cor- rectly. Try using "goal seek" in Excel or solve by trial and error
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