A company is considering automating its production line with the following details Initial cost of automation 900,000 Expected annual savings 250,000 Life of automation system 6 years Depreciation Units of production method Salvage value 50,000 Discount rate 10 Required Calculate the NPV of the aut...

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A company is considering automating its production line with the following details: Initial cost of automation: 900,000

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A company is considering automating its production line with the following details:

Initial cost of automation: €900,000
Expected annual savings: €250,000
Life of automation system: 6 years
Depreciation: Units of production method
Salvage value: €50,000
Discount rate: 10%

Required:

Calculate the NPV of the automation project.
Determine the IRR.
Compute the payback period.
Assess the average accounting rate of return (ARR).
Recommend whether to proceed with automation.

Posted Date: Jun 05, 2024 03:40 AM

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A company is considering automating its production line with the following details: Initial cost of automation: 900,000

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