Reference no: EM131628469

In the near future it is expected that Companion Robots will be used for lawn care, pool maintenance, floor cleaning, and other household tasks and, a new generation of humanized robots that will answer questions, control home electronics systems and take care of routine physical tasks will be common in most households. Zoe Graystone wants to purchase a new Companion Robot to help out with chores around the estate. The initial cost of the robot is $60,000. Ms. Graystone will have to finance the robot over a five year period at an interest rate of 8% per year. A 20% down payment will be required by the loan. Compute the down payment, amount financed and the yearly finance payment for the loan. The estimated salvage value of the robot is 15% of the initial cost. The operating and maintenance cost of the robot is expected to be $10,000 in the third year of operation with increasing costs of $1,500 per year thereafter throughout the remaining life of the robot. Annual savings realized by the purchase of the robot is expected to decrease at a rate of 4% per year. The service life of the robot will be fifteen years. Compute the amount of annual savings required in the first year if Zoe wants to break-even on her investment after fifteen years. Assume Zoe will use a MARR of 9% per year.