The Brisbane Manufacturing Company produces a single model of a CD player. Each player is sold for $187 with a resulting contribution margin of $78. Brisbane management is considering a change in its quality control system. Currently, Brisbane spends $39.500 a year to inspect the CD players. An average of 2,100 units turn out to be defective 1.680 of them are detected in the Inspection process and are repaired for $80. If a defective CD player is not identified in the inspection process, the customer who receives it is given a full refund of the purchase price The proposed quality control system involves the purchase of an x-ray machine for $220,000. The machine would last for four years and would have salvage value at that time of $18,000. Brisbane would also spend $460.000 immediately to train workers to better detect and repair defective units. Annual Inspection costs would increase by $22,000. Brisbane expects this new control system to reduce the number of detective units to 400 per year. 140 of these defective units would be detected and repaired at a cost of only $41 per unit. Customers who still receive defective players will be given a refund equal to 120% of the purchase price. Question 12 [ points: unlimited tries) 1 What is the Year 3 cash now i Brane keeps using its current system? jutime Anne Tres 0/99 2. What is the Year 3 cash flow if Brisbane repiacet its current system SubsAnwer Tries/99 Questions 3 8.4 ts points each; 5 tries each] 3. Assuming a discount rate of 6%, what is the net present value of Brisbane keeps using its current system? Submit Ano Tries 0/5 4. Assuming a discount rate of 6%, what is the net present value if Brisbane replaces its current system? The Brisbane Manufacturing Company produces a single model of a CD player. Each player is sold for $187 with a resulting contribution margin of $78. Brisbane management is considering a change in its quality control system. Currently, Brisbane spends $39.500 a year to inspect the CD players. An average of 2,100 units turn out to be defective 1.680 of them are detected in the Inspection process and are repaired for $80. If a defective CD player is not identified in the inspection process, the customer who receives it is given a full refund of the purchase price The proposed quality control system involves the purchase of an x-ray machine for $220,000. The machine would last for four years and would have salvage value at that time of $18,000. Brisbane would also spend $460.000 immediately to train workers to better detect and repair defective units. Annual Inspection costs would increase by $22,000. Brisbane expects this new control system to reduce the number of detective units to 400 per year. 140 of these defective units would be detected and repaired at a cost of only $41 per unit. Customers who still receive defective players will be given a refund equal to 120% of the purchase price. Question 12 [ points: unlimited tries) 1 What is the Year 3 cash now i Brane keeps using its current system? jutime Anne Tres 0/99 2. What is the Year 3 cash flow if Brisbane repiacet its current system SubsAnwer Tries/99 Questions 3 8.4 ts points each; 5 tries each] 3. Assuming a discount rate of 6%, what is the net present value of Brisbane keeps using its current system? Submit Ano Tries 0/5 4. Assuming a discount rate of 6%, what is the net present value if Brisbane replaces its current system
