Part 1 of 5 farginal cost-benefit analysis and the goal of the firm Ken Allen, capital budgeting analyst for Bally Gears, Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics used on the heavy truck gear line will produce total benefits of $525,000 (in oday's dollars) over the next 5 years. The existing robotics would produce benefits of $423,000 (also in today's dollars) over that same time period. An initial cash investment of $210,000 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $82,000. thow how Ken will apply marginal cost-benefit analysis techniques to determine the following: - The marginal benefits of the proposed new robotics. The marginal cost of the proposed new robotics. - The net benefit of the proposed new robotics. L What should Ken recommend that the company do? Why? .What factors besides the costs and benefits should be considered before the final decision is made? - The marginal (added) benefits of the proposed new robotics is $- (Round to the nearest dollar.)
Part 1 of 5 farginal cost-benefit analysis and the goal of the firm Ken Allen, capital budgeting analyst for Bally Gears, Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics used on the heavy truck gear line will produce total benefits of $525,000 (in oday's dollars) over the next 5 years. The existing robotics would produce benefits of $423,000 (also in today's dollars) over that same time period. An initial cash investment of $210,000 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $82,000. thow how Ken will apply marginal cost-benefit analysis techniques to determine the following: - The marginal benefits of the proposed new robotics. The marginal cost of the proposed new robotics. - The net benefit of the proposed new robotics. L What should Ken recommend that the company do? Why? .What factors besides the costs and benefits should be considered before the final decision is made? - The marginal (added) benefits of the proposed new robotics is $- (Round to the nearest dollar.)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter15: Capital Investment Analysis
Section: Chapter Questions
Problem 15.6C
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