Question
Production Company is considering the purchase of a flexible manufacturing system. The annual cash benefits/savings associated with the system are as follows: Decreased waste $
Production Company is considering the purchase of a flexible manufacturing system. The annual cash benefits/savings associated with the system are as follows:
Decreased waste $ 150,000
Increased quality 200,000
Decrease in operating costs 125,000
Increase in on-time deliveries 25,000
The system will cost $1,500,000 and will last 10 years. The company's cost of capital is 10 percent.
Help me understand how to:
- Calculate the payback period for the flexible manufacturing system.
- Calculate the NPV for the flexible manufacturing system.
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Cost Management Accounting And Control
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
6th Edition
324559674, 978-0324559675
