Purchase of new? state-of-the-art cad and cam system

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Question

Business at your design engineering firm has been brisk. To keep up with the increasing? workload, you are considering the purchase of a new? state-of-the-art CAD/CAM system costing ?$410 comma 000?, which would provide 6 comma 000 hours of productive time per year. Your firm puts a lot of effort into drawing new product designs. At? present, this is all done by design engineers on an old? CAD/CAM system installed five years ago. If you purchase the? system, 40?% of the productive time will be devoted to drawing? (CAD) and the remainder to CAM. While? drawing, the system is expected to? out-produce the old? CAD/CAM system by a factor of 3?:1. You estimate that the additional annual? out-of-pocket cost of maintaining the new? CAD/CAM system will be ?$155 comma 000?, including any tax effects. The expected useful life of the system is eight? years, after which the equipment will have no residual value. As an? alternative, you could hire more design engineers. Each normally works 2 comma 400 hours per? year, and 60?% of this time is productive. The total cost for a design engineer is ?$65 per hour. There are five design engineers. Identify the net cash flows? (benefits.

Reference no: EM133664377

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