Project Valuation Glentech Manufacturing is considering the purchase of an automated parts handler for the assembly and test area of its Phoenix, Arizona, plant. The handler will cost $250,000 to purchase plus $10,000 for installation and employee training. If the company undertakes the investment, it will automate a part of the semiconductor test area and reduce the operating costs by $70,000 per year for the next 10 years. However, five years into the investment?s life, Glentech will have to spend an additional $100,000 to update and refurbish the handler. The investment in the handler will be depreciated using straight-line depreciation over 10 years, and the refurbishing costs will be depreciated over the remaining five-year life of the handler (also using straight-line depreciation). In 10years, the handler is expected to be worth$5,000, although its book value will be zero. Glentech?s tax rate is 30%, and its opportunity cost of capital is 12%.
Paper#2612 | Written in 18-Jul-2015Price : $25