Burns manufacturing is investigating the purchase of new equipment that would save $ 3 0 0 0 0 0 each year in materials and labor costs. The equipment costs $ 1 5 0 0 0 0 0 and is expected to have a 6 year useful life with no salvage value. The companys required rate of return is 8 % on all equipment purchases. this equipment would provide intangible benefits such as a greatwe flexibility and higer quality output that are difficult to estimate and yet are quite significant.

Answer rating: 100% (QA)

To evaluate the potential purchase of the new equipment we need to perform a capital budgeting analysis and consider both the quantitative and qualita... View the full answer