Acme Motors has need of several new pieces of equipment for the manufacturing floor. One of these, an advanced 6axis robotic arm, is something Acme believes it could particularly put to good use. The specific information for this purchase is given in the table below.
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Initial cost of the robotic arm
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-$345,000
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Reduced annual cost over current equipment
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$96,000
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Annual additional maintenance and programming cost
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-$17,000
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Anticipated market value of the robotic arm after 10 years of life
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$95,000
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Initial cost of the robotic arm $345,000 Reduced annual cost over current equipment $96,000 Annual additional maintenance and programming cost $17,000 Anticipated market value of the robotic arm after 10 years of life $95,000 What is the capital recovery cost for the investment in the robotic arm? Acme’s MARR is 18%