6.21 An industrial firm is considering purchasing several programmable controllers and automating the company's manufacturing operations. It is estimated that the equip - ment will initially cost $120,000, and the labor to install it will cost $25,000. A ser - vice contract to maintain the equipment will cost $5,000 per year. Trained service personnel will have to be hired at an annual salary of $50,000. Also estimated is an approximate $10,000 annual income-tax savings (cash inflow). How much will this investment in equipment and services have to increase the annual revenues after taxes in order to break even? The equipment is estimated to have an operating life of 10 years with no salvage value (because of obsolescence). The firm's MARR is 12%. Answers: 6.21: 70663
6.21 An industrial firm is considering purchasing several programmable controllers and automating the company's manufacturing operations. It is estimated that the equip - ment will initially cost $120,000, and the labor to install it will cost $25,000. A ser - vice contract to maintain the equipment will cost $5,000 per year. Trained service personnel will have to be hired at an annual salary of $50,000. Also estimated is an approximate $10,000 annual income-tax savings (cash inflow). How much will this investment in equipment and services have to increase the annual revenues after taxes in order to break even? The equipment is estimated to have an operating life of 10 years with no salvage value (because of obsolescence). The firm's MARR is 12%. Answers: 6.21: 70663
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Don't use ai to answer I will report your answer
Solve it Asap with explanation

Transcribed Image Text:6.21 An industrial firm is considering purchasing several programmable controllers and
automating the company's manufacturing operations. It is estimated that the equip -
ment will initially cost $120,000, and the labor to install it will cost $25,000. A ser -
vice contract to maintain the equipment will cost $5,000 per year. Trained service
personnel will have to be hired at an annual salary of $50,000. Also estimated is an
approximate $10,000 annual income-tax savings (cash inflow). How much will this
investment in equipment and services have to increase the annual revenues after
taxes in order to break even? The equipment is estimated to have an operating life of
10 years with no salvage value (because of obsolescence). The firm's MARR is 12%.
Answers:
6.21: 70663
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 5 images

Recommended textbooks for you


Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON


Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON

Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning

Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education