Question
Chi Logistics is planning to upgrade its warehouse facilities. The initial investment for the upgrade is $700,000. The expected life of the facilities is 8
Chi Logistics is planning to upgrade its warehouse facilities. The initial investment for the upgrade is $700,000. The expected life of the facilities is 8 years with no salvage value. The upgrade is expected to generate additional annual revenue of $200,000, with annual operating costs of $80,000. The company’s cost of capital is 10%.
Requirement: Calculate the NPV, payback period, and IRR for the investment. Should Chi Logistics proceed with the upgrade? Provide a detailed analysis based on your calculations.###question_divider###
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
6th Canadian edition
1118644948, 978-1118805084, 1118805089, 978-1118644942
