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Fort Belvoir, VA is considering the purchase of a new $300k machine to assist with sorting recyclables at its post transfer station. The machine is anticipated to increase transfer station maintenance costs by $5,000 per year and generate savings of $15,000 per year (from reducing the required number of employees) for the entirety of its economic useful life of 10 years. The installation anticipates the machine will have a $150k salvage value at the end of year 10. If FBVA’s MARR for this period is 8%, is the robot a good investment? Why or why not?

pur-new-sol

A)Machine Cost		$300000
B)life of machine		10 year
C)working capital requirement		$5000
D)CPVIF for 10 years @ 8%		6.71
E)present value of working capital (C*D)		$33550
F)Present value of total cash out flow (A+E)		$333550

G)Yearly cash in flow		$15000
H)CPVIF for 10 years @ 8%		6.71
I)Present value of cash in flow		$100650
J) salvage vaue		$150000
K) PVIF For 10 years @ 8%		0.463
L)Present value of salvage value		$69450
M) Present value of total cash in flow		$170100

Net loss (F - M)		$163450

CPVIF = Cumulative present value intex factor

PVIF = Present value intex factor

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