Question
Barker Production Company is considering the purchase of a flexible manufacturing system. The annual cash benefits/savings associated with the system are: Decreased waste$ 75,000 Increased
Barker Production Company is considering the purchase of a flexible manufacturing system. The annual cash benefits/savings associated with the system are:
Decreased waste$ 75,000
Increased quality100,000
Decrease in operating costs62,500
Increase in on-time deliveries12,500
The system will cost $750,000 and will last ten years. The company's cost of capital is 10%.
Required:
A.What is the payback period for the flexible manufacturing system?
B.What is the NPV for the flexible manufacturing system?
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MIS Management Information Systems
Authors: Hossein Bidgoli
8th edition
978-1337406932, 1337406937, 978-1337406925, 1337406929, 978-0357004357
