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A shipyard plans topurchase a new panel line machine for the cost of $1.5million dollars. It...

A shipyard plans topurchase a new panel line machine for the cost of $1.5million dollars. It will also need to train 75 people to operate the machine. The training period takes twelveweeks. No production can take place during training. The panel line has an economic life of 15 years, with a scrap value of $250,000at the end of its life. Maintenance for the machine costs $10,000 for the first year and increases by 5% per year for the life of the machine. The panel line is expected to save 10,000 worker hours per year, compared to the current system. Shipyard workers are paid an average of $25 per hour. a)If the company has an internal rate of return of 15%, should the proposed purchase go ahead? b)How many worker hours per year must be saved per year for the project to break even?

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ekkarill92 answered 2 years ago
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