A machine costing $25,000 to buy and $3,000 per year to operate, will save mainly labor expenses in packaging over six years. The anticipated salvage value of the labor expenses in packaging over six years. The anticipated salvage value of the machine at the end of six years is $5000.
a) if 10% return on investments (rate of return) is desired, what is the minimum required annual saveings in labor from this machine?
b) If the service life is just five years, instead of six years, what is the minimum required annual savings in lavore for the firm to realize a 10% return on investment?
c)if the annual operating cost increases 10% say 3000 to 3300 what will hapen to answer a?