A computerized machining centre has been proposed for a small tool manufacturing company. If the new machine, which costs $250,000, is installed, it will generate annual revenues of $100,000 and will require $20,000 in annual labour, $12,000 in annual material expenses, and another $8,000 in annual overhead expenses. The automation facility has a CCA rate of 30%.The company expects to phase out the facility in five years, at which time it will be sold for $50,000. The company's MARR is 15% and its tax rate is 40%. Half of the machine purchase cost has to be financed with an amortized loan to be paid off with five equal annual installments at 12% annual interest rate.

The net income in year 1 is