Marginal benefits with new robotics

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Reference no: EM131871712

Ken Allen, capital budgeting analyst for Bally Gears Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics used on the heavy truck gear-line will produce total benefits of 560,000 (in today’s dollars) over the next 5 years. The existing robotics would produce benefits of $400,000 (also in today’s dollars) over that same period. An initial cash investment of $220,000 would be required to install the new equipment. The manager estimates that the robotics can be sold for $70,000. Show how Ken would apply marginal cost-benefit analysis techniques to the determine the following:

a) Marginal Benefits with new robotics:

b) Less: Marginal Benefits with new robotics:

c) =Marginal Benefits of proposed new robotics

Reference no: EM131871712

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