An industrial firm is considering purchasingseveral programmable controllers and automatingthe company’s manufacturing operations. It is estimated that the equipment will initially cost $120,000,and the labor to install it will cost $25,000. A servicecontract to maintain the equipment will cost $5,000per year. Trained service personnel will have to behired at an annual salary of $50,000. Also estimatedis an approximate $10,000 annual income-tax savings (cash inflow). How much will this investment inequipment and services have to increase the annualrevenues after taxes in order to break even? Theequipment is estimated to have an operating life of10 years with no salvage value because of obsolescence. The firm’s MARR is 12%
An industrial firm is considering purchasing
several programmable controllers and automating
the company’s manufacturing operations. It is estimated that the equipment will initially cost $120,000,
and the labor to install it will cost $25,000. A service
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 (
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%
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