Question
Project Alpha has a useful life of two-years, or eight quarters.After that time, technology is expected to change sufficiently to require a new data capture
Project Alpha has a useful life of two-years, or eight quarters.After that time, technology is expected to change sufficiently to require a new data capture system.The project costs $533K and is able to be applied to a maximum of 100,000 hours of equipment usage per quarter (note that if your projected usage is less than 100,000 hours of exercise time per quarter you will have to adjust your analysis accordingly.)Project Alpha is expected to create overhead savings in reduced maintenance costs of $16K per quarter.Initial labor savings (in the first quarter of operation) are forecasted to be $0.66 per hour of exercise time.After the first quarter, as the club's personal trainers begin to realize the benefit of this system, the labor savings are forecasted to increase by $0.04 per quarter.What is the cases NPV, IRR, MIRR, Profitability Index (PI) and Payback (PB).
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