A large food-processing corporation is considering using laser technology to speed up and eliminate waste in the

Question:

A large food-processing corporation is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing $3 million to purchase the industrial-strength lasers. The system will save $1,200,000 per year in labor and materials. However, it will incur an additional operating and maintenance cost of $250,000 per year. Annual income taxes will also increase by $150,000. The system is expected to have a 10-year service life and a salvage value of about $200,000. If the company’s MARR is 18%, justify the economics of the project using the PW method.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

Fantastic news! We've Found the answer you've been seeking!