Question
Economic Feasibility Glenns Electronics (GE), a small but growing company wants to introduce a new computer system for its products warehouse. The management is concerned
Economic Feasibility
Glenns Electronics (GE), a small but growing company wants to introduce a new computer system for its products warehouse. The management is concerned about the instability of the current global economy and would want a quicker payback period on investment but at the same time would not want to compromise their investment opportunity cost which currently stands at 6%. Solution 1 values are given to you to compute. |
Two solutions are being considered of which Solution 2 values have already been computed for you as follows:
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For this problem,
- [4] Complete the cost/benefit analysis spreadsheet on the next page, using the Net Present Value (NPV) method.
- [4] Calculate the payback period and ROI, if applicable. If not applicable, make a statement why it is not applicable.
- [2] Based on your understanding of the economic objectives of GE, offer advice to management on the choice of system (Solution 1 or Solution 2), and justify your advice.
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