Question
Chi Logistics is planning to upgrade its warehouse facilities. The initial investment for the upgrade is $800,000. The expected life of the facilities is 10
Chi Logistics is planning to upgrade its warehouse facilities. The initial investment for the upgrade is $800,000. The expected life of the facilities is 10 years with no salvage value. The upgrade is expected to generate additional annual revenue of $250,000, with annual operating costs of $120,000. 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.
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Cost Accounting Foundations and Evolutions
Authors: Michael R. Kinney, Cecily A. Raiborn
8th Edition
9781439044612, 1439044619, 978-1111626822
