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Consider two manufacturing firms: Mutty Bites, which manufactures dry dog food, and Cyber Ultronics, which manufactures humanoid robots. The two firms share some similarities. For
Consider two manufacturing firms: Mutty Bites, which manufactures dry dog food, and Cyber Ultronics, which manufactures humanoid robots. The two firms share some similarities. For example, both firms have revenues of $ per year. Further, both firms are considering investing in manufacturing system enhancements that could improve internal manufacturing efficiencies that would initially increase profits by $ per year. Both system projects are estimated to cost $ over the course of Year You can assume the $ per year business benefits start immediately at the beginning of Year Of course, the firms are quite different in other ways. Mutty Bites uses a manufacturing process of extruding pellets of dog food that has been fundamentally stable and unchanged for many years. In contrast, Cyber Ultronicss manufacturing process is constantly evolving, including the increasing use of its own products in the manufacturing process ie robots building other robots Given these issues, How many years into the future should each firm project $k in business benefits?
If you were a shareholder in each of these firms, which of these projects would you support?
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