Marginal? cost-benefit analysis

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Reference no: EM131625188

Marginal? cost-benefit analysis and the goal of the firm 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 568,000 ?(in today's? dollars) over the next 5 years. The existing robotics would produce benefits of 446,000 (also in? today's dollars) over that same time period. An initial cash investment of $227,200 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $73,000. Show how Ken will apply marginal? cost-benefit analysis techniques to determine the? following:

a. The marginal? (added) benefits of the proposed new robotics.

b. The marginal? (added) cost of the proposed new robotics.

c. The net benefit of the proposed new robotics.

d. What should Ken recommend that the company? do? Why?

e. What factors besides the costs and benefits should be considered before the final decision is? made?

Reference no: EM131625188

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