Business at your design engineering firm has been brisk To

Last updated: 1/27/2024

Business at your design engineering firm has been brisk To keep up with the increasing workload you are considering the purchase of a new state of the art CAD CAM system costing 360 000 which would provide 6 000 hours of productive time per year Your firm puts a lot of effort into drawing new product designs At present this is all done by design engineers on an old CAD CAM system installed five years ago If you purchase the system 30 of the productive time will be devoted to drawing CAD and the remainder to CAM While drawing the system is expected to out produce the old CAD CAM system by a factor of 3 1 You estimate that the additional annual out of pocket cost of maintaining the new CAD CAM system will be 200 000 including any tax effects The expected useful life of the system is eight years after which the equipment will have no residual value As an alternative you could hire more design engineers Each normally works 1 800 hours per year and 60 of this time is productive The total cost for a design engineer is 65 per hour There are five design engineers Identify the net cash flows benefits and costs associated with the drawing activities if the CAD CAM system is purchased instead of hiring more design engineers In year 0 the net cash flow associated with the drawing activities if the CAD CAM system is purchased instead of hiring more design engineers will be Round to the nearest dollar