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eBook Question Content Area Payback Period, Net Present Value Analysis, and Qualitative Considerations The plant manager of Jurassic Industries is considering the purchase of new
eBook
Question Content Area
Payback Period, Net Present Value Analysis, and Qualitative Considerations
The plant manager of Jurassic Industries is considering the purchase of new automated assembly equipment. The new equipment will cost $272,000. The manager believes that the new investment will result in direct labor savings of $34,000 per year for 10 years.
a. What is the payback period on this project? fill in the blank 1 years
b. What is the net present value, assuming a 15% rate of return? Use the table provided below. If required, enter a negative net present value using a minus sign.
| Present Value of an Annuity of $1 at Compound Interest | |||||
| Year | 6% | 10% | 12% | 15% | 20% |
| 1 | 0.943 | 0.909 | 0.893 | 0.870 | 0.833 |
| 2 | 1.833 | 1.736 | 1.690 | 1.626 | 1.528 |
| 3 | 2.673 | 2.487 | 2.402 | 2.283 | 2.106 |
| 4 | 3.465 | 3.170 | 3.037 | 2.855 | 2.589 |
| 5 | 4.212 | 3.791 | 3.605 | 3.353 | 2.991 |
| 6 | 4.917 | 4.355 | 4.111 | 3.785 | 3.326 |
| 7 | 5.582 | 4.868 | 4.564 | 4.160 | 3.605 |
| 8 | 6.210 | 5.335 | 4.968 | 4.487 | 3.837 |
| 9 | 6.802 | 5.759 | 5.328 | 4.772 | 4.031 |
| 10 | 7.360 | 6.145 | 5.650 | 5.019 | 4.192 |
Net present value:
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The Insiders Guide To Dol Plan Audits How To Survive An Employee Benefit Plan Audit
Authors: Frank J. Bitzer, Jr. Ferrigno, Nicholas W.
1st Edition
0872182711, 978-0872182714
