Calculate the payback period for this purchase

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Reference no: EM132033825

A turn-key, Kuka robotic welding system costs $370,000. If you purchase this system, you would also pay a monthly service fee of $949. The system will save an estimated $13, 400 per month in labor at your current production rates.

It will also reduce the cost of your consumables by $2250 per month. The robotic welding system has no salvage value.

You will have to borrow the money and pay it back in three years. Current interest rates are 3.50% APR and the robot is guaranteed for three years. Calculate the payback period for this purchase.

Total costs (P_costs): ____

Total savings (M_savings): ____

Payback Period (include units): ____

Based on payback period, is this a wise purchase? Yes No

Reference no: EM132033825

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