Pigs-R-Us is trying to decide whether or not to automate their meat packing process. The machine costs $200,000, has a useful life of 10 years and a salvage value of $10,000. It will require a $60,000 overhaul after 5 years of use. The machine costs $9,000 per year to operate and maintain, but it will save the company $50,000 per year in labor costs. Pigs-R-Us has asked you to evaluate the economics of this purchase and tell them what do to. If their MARR is 14%, what would you recommend? Use External Rate of Return Method.

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.