Question: 5 - 2 6 . A new manufacturing tool is expected to cost $ 1 5 0 , 0 0 0 . 0 0 ,

5-26. A new manufacturing tool is expected to cost $150,000.00, but it
would change the production rate from 15 assemblies per day (in two daily
shifts) to 40 during a single shift. The power for the machine is expected to
cost $0.25 per hour and maintenance is priced at $1,000 per year. Demand
for this product is expected at the current rate for the next 10 years. Currently three operators are needed for this process, but only one is expected to
be required with the new machine. Assume that the company uses $25 per
hour for an employee. The company uses a minimum attractive rate of interest at 10% annually or an equivalent amount. Should you as the manager of
the ergonomics department recommend this purchase, and what is the net
present worth?

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