Eddie is a production engineer for a major sup-plier of
Chapter , Problem 4-97(choose chapter or problem)
Eddie is a production engineer for a major sup-plier of component parts for cars. He has determinedthat a robot can be installed on the production lineto replace one employee. The employee earns $20per hour and benefits worth $8 per hour for a totalannual cost of $58,240 this year. Eddie estimatesthis cost will increase 6% each year. The robot willcost $16,500 to operate for the first year with costsincreasing by $1500eachyear. Thefirm usesan inter-est rate of 15% and a 10-year planning horizon. Therobot costs $75,000 installed and will have a sal-vage value of $5000 after 10 years. Should Eddierecommend that purchase of the robot?
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