Problem
In evaluating projects, New Tech's engineers use a discount rate of 15% for a before-tax analysis. One year ago, a robotic transfer machine was installed at a cost of $38,000. At the time, a 10-year life was estimated, but the machine has had a down-time rate of 28%, which is unacceptably high. A $12,000 upgrade should fix the problem, or a labor-intensive process costing $3500 in direct labor per year can be substituted. The plant estimates indirect plant expenses at 60% of direct labor costs, and it allocates front-office overhead at 40% of plant expenses (direct and indirect). The robot has a value in other uses of $15,000. What is the EAC for upgrading? For switching to the labor-intensive process?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.