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1 . How should the $ 2 3 , 0 0 0 payment to the CPA be handled in the capital budgeting analysis? Why? Be
How should the $ payment to the CPA be handled in the capital budgeting analysis? Why? Be specific.
How should the $ per hour charge for computer time charged by the Manufacturing Department to the Purchasing Department be included in the capital budgeting analysis? Why? Be specific.
What discount rate should you use in the capital budgeting analysis? Why?
Calculate the NPV of each alternative using the six steps of capital budgeting and the cost
savings shown in Table above. For Question # assume that there is no salvage value. At this stage of the analysis, we are assuming that at the end of the equipments year life, it will be scrapped for zero value.
In Question # the CFO is concerned that a change in technology might make the new system obsolete after years. If this occurs and you only obtain years of cost savings as per Table above and no salvage value, which alternative if any would you now recommend?
In Question # the vendors of both systems have indicated that they are working on a new generation of robotics which they expect will totally eliminate the function of the current generation of equipment. If they are able to do this, they would be willing to repurchase the current systems for the following amounts:
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