Question

Mr. Asimov must replace the 8 robots on his assembly line. The Robo100 model costs $30152 per robot and they will last for three years. The EconoRobo model costs $10878 per robot and will last for two years. The Robo100 models will have an end of life salvage value of $7553 each. The EconoRobo models will not have any value at the end of their lives. The Robo100 models are also more energy efficient and it is estimated Mr. Asimov will be able to save a total of $3595 per year in energy costs. Mr. Asimov uses a MARR of 10% to evaluate potential investments. Using present worth analysis, what is the present worth of the Robo100 system? Notes: Assume all robots on the assembly line are replaced.

Answer 1

ANSWER:

i had a doubt regarding the savings whether it is for 1 robot or for 8 robots ($3,595) and so therefore i have solved for both the scenarios and firstly i will be solving as $3,595 as saving for 1 robot and then for 8 robots.

so please check with your teacher whether the savings are for 1 robot or 8 robots.

1) when saving is $3,595 for 1 robot.

Initial cost of 1 robo100 model = $30,152

total initial cost of 8 robo 100 model = $30,152 * 8 = $241,216

salvage value of 1 robo model = $7,553

total salvage value of 8 robo 100 model = $7,553 * 8 = $60,424

savings by mr. asimov on 1 robo model = $3,595

total savings by mr. asimov on 8 robo models = $3,595 * 8 = $28,760

i =10% and n = 3 years

present worth = total initial cost + total savings(p/a,i,n) + total salvage value(p/f,i,n)

pw = -241,216 + 28,760(p/a,10%,3) + 60,424(p/f,10%,3)

pw = -241,216 + 28,760 * 2.487 + 60,424 * 0.7513

pw = -241,216 + 71,526.12 + 45,396.55

pw = -$124,293.32

2) when saving is $3,595 for 8 robot.

Initial cost of 1 robo100 model = $30,152

total initial cost of 8 robo 100 model = $30,152 * 8 = $241,216

salvage value of 1 robo model = $7,553

total salvage value of 8 robo 100 model = $7,553 * 8 = $60,424

savings by mr. asimov on 8 robo model = $3,595

i =10% and n = 3 years

present worth = total initial cost + total savings(p/a,i,n) + total salvage value(p/f,i,n)

pw = -241,216 + 3,595(p/a,10%,3) + 60,424(p/f,10%,3)

pw = -241,216 + 3,595 * 2.487 + 60,424 * 0.7513

pw = -241,216 + 8,940.765 + 45,396.55

pw = -$186,878.68