Question
Quantum Logistics, Inc., a wholesale distributor, is considering the construction of a new warehouse to serve the southeastern geographic region near the AlabamaGeorgia border. There
Quantum Logistics, Inc., a wholesale distributor, is considering the construction of a new warehouse to serve the southeastern geographic region near the AlabamaGeorgia border. There are three cities being considered. After site visits and a budget analysis, the expected income and costs associated with locating in each of the cities have been determined. The life of the warehouse is expected to be 12 years, and MARR is 15 %/year.
City | Initial Cost | Net Annual Income |
Lagrange | $1,260,000 | $480,000 |
Auburn | $1,000,000 | $410,000 |
Anniston | $1,620,000 | $520,000 |
a) What is the discounted payback period for each location?
Lagrange:
Auburn:
Anniston:
b) Which city should Quantum logistics slect if they wish to minimize DPBP?
c) Is this recommendation consistent with a present worth analysis recommendation?
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