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You own a warehouse company, which provides logistics services to online retailers. You are considering overhauling an existing packaging line in one of your warehouses.The
You own a warehouse company, which provides logistics services to online retailers. You are considering overhauling an existing packaging line in one of your warehouses.The new robotic technology you consider costs $ million in Year and has a useful life of years. You estimate that increased efficiency and throughput will generate incremental revenue of $ million in Year Year Year and Year Operating expenses without depreciation for the warehouse are of the total revenue each year. Assume that the new equipment will be depreciated using a straightline method over years. The appropriate cost of capital is and the tax rate is Your goal is to make a decision on whether to proceed with the overhaul of the existing line.
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