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Question 5.T-Y-S.I: An assembly operation at a software company now requires $10...

An assembly operation at a software company now requires \$ 100,000 per year in labor costs. A robot can be purchased and installed to automate this operation. The robot will cost \$ 200,000 and will have no market value at the end of the 10-year study period. Maintenance and operation expenses of the robot are estimated to be \$ 64,000 per year. Invested capital must earn at least 12 \% per year. Use the IRR method to determine if the robot is a justifiable investment. (5.6)

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P W=0=-\$ 200,000+(\$ 100,000-\$ 64,000)\left(P / A, i^{\prime}, 10\right)

i^{\prime}=12.4 \%> MARR; project is justified.

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