A turn-key, Kuka robotic welding system costs $370,000. If you purchase this system, you would also pay a monthly service fee of $949. The system will save an estimated $13, 400 per month in labor at your current production rates.
It will also reduce the cost of your consumables by $2250 per month. The robotic welding system has no salvage value.
You will have to borrow the money and pay it back in three years. Current interest rates are 3.50% APR and the robot is guaranteed for three years. Calculate the payback period for this purchase.
Total costs (P_costs): ____
Total savings (M_savings): ____
Payback Period (include units): ____
Based on payback period, is this a wise purchase? Yes No