Question
Retailers Inc. is considering a new inventory management system costing $250,000. The system will save the company $60,000 annually over its 5-year life. The system
Retailers Inc. is considering a new inventory management system costing $250,000. The system will save the company $60,000 annually over its 5-year life. The system will be depreciated on a straight-line basis with no salvage value.
Requirements:
- Calculate the annual depreciation expense.
- Determine the payback period.
- Calculate the NPV using a discount rate of 6%.
- Assess the IRR.
- Should Retailers Inc. invest in the inventory management system?
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Cost Management Measuring Monitoring And Motivating Performance
Authors: Leslie G. Eldenburg, Susan K. Wolcott
2nd Edition
978-0-470-7694, 0470769424, 978-0470769423
