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The plant manager of Orlando Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $168,000. The manager
The plant manager of Orlando Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $168,000. The manager believes that the new investment will result in direct labor savings of $56,000 per year for 10 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. What is the payback period on this project? 3 years b. What is the net present value, assuming a 12% rate of return? Use the table provided above. Round to the nearest whole dollar. Net present value $ c. What else should the manager consider in the analysis?
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