Aging production line that constantly needs maintenance

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You supervise an aging production line that constantly needs maintenance and new parts. Last month you spent $25,000 replacing a failed controller. Should the following plan be accepted if the interest rate is 15%. The net installed cost of the new line is $600,000 with a useful life of 6 years. First year of operation will cost $100,000 and will generate annual revenues of $300,000. Each year the operating cost will increase by $5,000 and revenues will fall $15,000. After 6 years the equipment will have a value of $100,000 in the next re-building of the line.

Reference no: EM13737917

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