Computerized Machining Center

Computerized Machining Center in $2 Only (Instant Download)

A computerized machining center has been proposed for a small tool manufacturing company. The new system, which costs $250,000.In the first year, it will generate annual revenues of $100,000 and will require $25,000 in annual labor expenses, $15,000 in annual material expenses, and another $10,000 in annual overhead (power and utility) expenses. Assume that the general inflation rate will be a 20% increase during the project period that will affect all revenues increasing by 20% per year thereafter and we except that salary for labor increase by 3% and overhead expenses will increase by 5% per year thereafter , and that cost of materials expenses will increase by 7% per year thereafter . for example ,whereas annual revenues had been estimated at $100,000, under the conditions of inflation they become 20% grater in year 2, or $120,000;and greater in year 3;and so forth. The automation facility would be classified as a seven-year MACRS property. The company expects to dispose out the facility at the end of 4th year and it will be sold for $120,000. Under these circumstances.
a) Develop the project’s cash flows over its project life. In your calculations use table value.