A process control manager is considering two robots to improve materials-handling capacity in the production of rigid shaft couplings that make dissimilar drive components. Robot X has a first cost of $94,000, an annual M&O cost $31,000, and $35,000 salvage value, and it will improve revenues by $96,000 per year.
Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, and $47,000 salvage value, and it will increase revenues by $125,000 per year. The company’s MARR is 13% per year, and it uses a 3-year study period for economic evaluations. Calculate the incremental ROR, and identify the robot the manager should select. %. The incremental ROR is 50458.40 The manager should select robot Y .
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