Suppose that you have just completed the mechanical design of a high-speed automated palletizer that has an investment cost of $2,600,000. The existing palletizer is quite old and has no salvage value. The market value for the new palletizer is estimated to be $160,000 after five years. One million pallets will be handled by the palletizer each year during the five-year expected project life. What net savings per pallet (i.e., total savings less expenses) will have to be generated by the palletizer to justify this purchase in view of a MARR of 25% per year? Use the AW method.
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