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
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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
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