Part 1 (NPV-IRR PsycoCeramic Scences, Inc. (PSI) is a large producer of large cracked pots and other cracked items. T The firm is considering the installation of a new manufacturing line that will itis hoped,allow more precise quality control on the size, shape, and location of cracks in its pols as well as vases designed to hold artificial flowers. The piant engineering department has submitted a project proposal that estimates the following investment requirements an initial investment $125 00o be paid up-front to the Pocketa-Pocketa machine corporation and additional investment of $100,009 to install the machines (at the end of Year 1) and another $90,000 to add new material handling systems and integrate the new equipment into the overal systems and integrate new equipment into the overall production system (end of Year 2). Delivery and installation is estimated year and integrating the entire system should require an additional year. Thereafter, the engineers predict that scheduled will require further expenditures of about $15,000 every second year, beginning the fourth year after installation is o however overhaul the machinery in the last year of its life. production to take one machine overhauls The project schdule cals for the line to begin production in the thrd year. Project manufacturing cost sevings and added profts resulting from higher quality are estimated to be $50,000 in the first year of production and are expected to peak at $120.000 in the second year of oper and tion. the to foilow the gradually declining pattem shown in the table below Time HorizonIncrease Profits 100,000 ear Year 2 Year Year 4 Year Year b Year 7 Year 8 Year 9 Year 10 Cout low 50,000 120,000 115,000 105,000 97,000 90,000 82,000 100,000 Project life is expected to be 10 years from the project inception, at which time the proposed system will be obsolete and will have to be replaced it is estimated that the machinery has a salvage value of $35 000. The interest rate is expected to be 3% for the entire pen of time ait 10 years) What is the Net Present Value (NPV) and the Internal Rate of Return (IRR) of this project? Part 2 fl.earning Cure Analysis) A manufacturer of diesel locomotives needs 50,000 hours to produce the first unit. Based on past experience with similar products, you know that the rate of learning is 80 percent. Estimate the direct labor required for the 40th diesel locomotive and the cumulative average number of iabor hours per unit for the first 40 units Part 1 (NPV-IRR PsycoCeramic Scences, Inc. (PSI) is a large producer of large cracked pots and other cracked items. T The firm is considering the installation of a new manufacturing line that will itis hoped,allow more precise quality control on the size, shape, and location of cracks in its pols as well as vases designed to hold artificial flowers. The piant engineering department has submitted a project proposal that estimates the following investment requirements an initial investment $125 00o be paid up-front to the Pocketa-Pocketa machine corporation and additional investment of $100,009 to install the machines (at the end of Year 1) and another $90,000 to add new material handling systems and integrate the new equipment into the overal systems and integrate new equipment into the overall production system (end of Year 2). Delivery and installation is estimated year and integrating the entire system should require an additional year. Thereafter, the engineers predict that scheduled will require further expenditures of about $15,000 every second year, beginning the fourth year after installation is o however overhaul the machinery in the last year of its life. production to take one machine overhauls The project schdule cals for the line to begin production in the thrd year. Project manufacturing cost sevings and added profts resulting from higher quality are estimated to be $50,000 in the first year of production and are expected to peak at $120.000 in the second year of oper and tion. the to foilow the gradually declining pattem shown in the table below Time HorizonIncrease Profits 100,000 ear Year 2 Year Year 4 Year Year b Year 7 Year 8 Year 9 Year 10 Cout low 50,000 120,000 115,000 105,000 97,000 90,000 82,000 100,000 Project life is expected to be 10 years from the project inception, at which time the proposed system will be obsolete and will have to be replaced it is estimated that the machinery has a salvage value of $35 000. The interest rate is expected to be 3% for the entire pen of time ait 10 years) What is the Net Present Value (NPV) and the Internal Rate of Return (IRR) of this project? Part 2 fl.earning Cure Analysis) A manufacturer of diesel locomotives needs 50,000 hours to produce the first unit. Based on past experience with similar products, you know that the rate of learning is 80 percent. Estimate the direct labor required for the 40th diesel locomotive and the cumulative average number of iabor hours per unit for the first 40 units