Horowitz Company is planning to produce 2000 units of product in 2012. Each unit

Horowitz Company is planning to produce 2000 units of product in 2012. Each unit requires 3 pounds of materials at $6 per pound and a half-hour of labor at $14 per hour. The overhead rate is 70$ of direct labor.Armand Company is considering a capital investment of $150000 in additional productive facilities. The new machinery is expected to have a useful life of 5 years with no salvage value. Depreciation is by the straight-line method. During the life of the investment annual net income and cash inflows are expected to be $18000 and $48000 respectively. Armando has a 12% cost of capital rate which is the minimum acceptable rate of return on the investment.