11.1 Boxer Production, Inc., is in the process of considering a flexible manufacturing system that will help
Question:
11.1 Boxer Production, Inc., is in the process of considering a flexible manufacturing system that will help the company react more swiftly to customer needs. The controller, Mick Morrell, estimated that the system will have a 10-year life and a required return of 10% with a net present value of negative $500,000.
Nevertheless, he acknowledges that he did not quantify the potential sales increases that might result from this improvement on the issue of on-time delivery, because it was too difficult to quantify.
If there is a general agreement that qualitative factors may offer an additional net cash flow of $150,000 per year, how should Boxer proceed with this investment?
Step by Step Answer:
Principles Of Accounting Managerial Accounting Volume 2
ISBN: 9781947172609
1st Edition
Authors: Patty Graybeal, Mitchell Franklin, Dixon Cooper