Question: An industrial firm is considering purchasing several programmable controllers and automating the company's manufacturing operations. It is estimated that the equipment will initially cost $120,000

An industrial firm is considering purchasing several programmable controllers and automating the company's manufacturing operations. It is estimated that the equipment will initially cost $120,000 and the labor to install it will cost $25,000. A service contract to maintain the equipment will cost $5,000 per year. Trained service personnel will have to be hired at an annual salary of $50,000. Also estimated is an approximate $10,000 annual income-tax savings (cash inflow). How much will this investment in equipment and services have to increase the annual revenues after taxes in order to break even? The equipment is estimated to have an operating life of 10 years with no because of obsolescence. The firm's is 12%.

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