The going aircraft corportation is manually producing a certain subassembly at a direct labor cost of $100,000 per year. Annual maintenance for the automated system will be $10,000, and its market (salvage) value will be $7000 at any time in the future. The systems useful life is 5 to 10 years, inclusive.
A. If the firm's MARR is 15% per year, develop a graph that shows how much money can be spent on the automated equipment ( Hint: Plot the PW of positive cash flows versus the useful life)
B. When N = 6 years and P = $444,000, what is the simple payback period?