Question: Publix is considering some upgrades to its Distribution Center in Lakeland. Evaluate the proposal below using the Internal Rate of Return approach. Publix’s MARR is 15%.

Should Publix approve this project? Hint: Try 30%.

Conveyor Improvements

Initial cost $150,000

Annual O&M 10,000

Salvage value 45,000

Estimated useful life 20 years

Estimated annual savings 55,000