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.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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