Question (3): The IPS company has installed a system to help reduce the number of defective products. The capital investment in the system is $X1, and the projected annual savings are tabled below. The system's market value at the EOY five is negligible, and the MARR is x2% per year. ΕΟΥ Savings 25,000 30,000 35,000 40,000 46,000 1 2 3 4 a. What is the FW of this investment? Based on economical decision rule, is this a good investment? b. What is the IRR of the system? Based on economical decision rule, is this a good investment? c. What is the discounted payback period for this investment?
Question (3): The IPS company has installed a system to help reduce the number of defective products. The capital investment in the system is $X1, and the projected annual savings are tabled below. The system's market value at the EOY five is negligible, and the MARR is x2% per year. ΕΟΥ Savings 25,000 30,000 35,000 40,000 46,000 1 2 3 4 a. What is the FW of this investment? Based on economical decision rule, is this a good investment? b. What is the IRR of the system? Based on economical decision rule, is this a good investment? c. What is the discounted payback period for this investment?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 21BEA
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X1=75000
X2=9%
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