Your company has an existing manufacturing program for a stable product line The process is relatively stable but you think there is room for improvement., you boldly state that, for $1,200,000 in capital equipment plus another $200,000 for R&D, you could improve 2 process steps (you choose which ones) 10% each and that this would recover the capital equipment expense in less than 12 months. Is this possible?

The expected monthly volumes are:

Month 1	16,500
Month 2	16,000
Month 3	22,750
Month 4	22,750
Month 5	25,000
Month 6	18,500
Month 7	17,000
Month 8	20,500
Month 9	19,000
Month 10	21,500
Month 11	19,750
Month 12	26,000

You will finance everything except R&D, which has is own internal funding. Your companys policy for profit is 44% on sell price. What are you going to recommend? Depending on your results, are there any other alternatives for you to consider?

Provide a comprehensive case to prove or disprove your assertion. I expect to see calculations..meaning ones relevant to what you have been learning lately. Answers without showing how you got them will not be counted.

Heres some more information and advice which you may find useful:

Financing rate is 9.0%; you will be financing over 12 months for simplicity

Manufacturing equipment such as what you are recommending, typically has a useful life of 6 years

E = mc²

Depreciate to zero

Be thorough and make sure that you have considered all factors and have listed and supported all decisions and assumptions used in your calculations