Fred Whittaker, the production manager for Kappatronics Medical Devices, is considering purchasing a new robotic assembly device that will improve production efficiency and lower the quality failure rate in the production process. The machine costs $130,000 to purchase. However, labor savings on each device produced is estimated to be $61. Marketing estimates device sales to be 600, 870, and 1120 units over the next three years and the machine is expected to operate for 3 years before a new version would be necessary for new product line. Fred has been told to use a discount rate of 10% for his NPV calculations by the company's CFO

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To calculate the Net Present Value NPV of purchasing the robotic assembly device we need to consider ... View the full answer