It's estimated that these new floor scrubbers will end up saving the company 75 man hours per year. The cost of one man hour is $25 and is expected to increase by 2% per year over the life of the project.
The floor scrubbers cost $11,000 in total and are projected to have a useful life of around seven years with a with a salvage value of $1,000.
Maintenance on these scrubbers is expected to cost $200 in the first year and is expected to increase by 1% per year over the life of the project.
Our required rate of return at the company is 8%. What is the Net Present Value of the Project? What is the IRR? Should we accept this project?
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