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Business, 05.06.2020 16:58, williams5847
Marginal​ cost-benefit analysis and the goal of the firm   Ken​ Allen, capital budgeting analyst for Bally​Gears, Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics used on the heavy truck gear line will produce total benefits of 568,000​(in today's​ dollars) over the next 5 years. The existing robotics would produce benefits of 446,000 (also in​ today's dollars) over that same time period. An initial cash investment of $227,200 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $73,000. Show how Ken will apply marginal​ cost-benefit analysis techniques to determine the​ following:
a.  The marginal​ (added) benefits of the proposed new robotics.
b.  The marginal​ (added) cost of the proposed new robotics.
c.  The net benefit of the proposed new robotics.  
d.  What should Ken recommend that the company​do? Why?
e.  What factors besides the costs and benefits should be considered before the final decision is​ made?
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Marginal​ cost-benefit analysis and the goal of the firm   Ken​ Allen, capital budgeting a...
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