Question: Learning Activity: Is your great idea worth it? Activity: You and your team came up with a plan to automate the very time-consuming process of

Learning Activity: Is your great idea worth it?

Learning Activity: Is your great idea worth it? Activity: You and your team came up with a plan to automate the very time-consuming process of manual welding by using robotic welders. First, compute how this would increase productivity. Year 1 Year 2 160 Output (sales, in $million) Labor (payroll, in Smillion) 120 $ 32 $ 26 Capital (expenses, in $million) 45 $ One-time capital investment ($million) $ 10 $ Productivity Year 1 Productivity Year 2 Change in Productivity= Next, using just the first year benefits (no amortization/depreciation), what is the ROI for this investment? Change in sales from Year 1 to Year 2 = Change in labor cost from Year 1 to Year 2 = Change in capital cost from Year 1 to Year 2 = Investment required to create this change = ROI = Based on these results, is this project a good idea or not? ssss $ $ $

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