1. You have been asked to assess a proposed project to buy a new automated assembly machine that will replace four workers. The machine will cost $315,000 to buy and install. It will also have an estimated maintenance cost of $2000 annually. The machine's expected lifespan will be 14 years and it will have an estimated salvage value of $4500 at the end of those 14 years. The machine will save the cost of four employees, whose individual salary and benefits cost is $41,000 per year. The corporate WACC rate is 5%. What is the NPV and IRR of this cashflow?

1. You have been asked to assess a proposed project to buy a new automated assembly machine that will replace four workers. The machine will cost $315,000 to buy and install. It will also have an estimated maintenance cost of $2000 annually. The machine's expected lifespan will be 14 years and it will have an estimated salvage value of $4500 at the end of those 14 years. The machine will save the cost of four employees, whose individual salary and benefits cost is $41,000 per year. The corporate WACC rate is 5%. What is the NPV and IRR of this cashflow?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6
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Q. 2
Give typing answer with explanation and conclusion
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