The plant manager of IHK is considering the purchase of a new robotic assemble plant. The new robotic line will cost $750,000. The manager believes that the new investment will result in direct labor savings of $187,500 per year for ten years. Requirements: a. What is the payback period for this project b. What is the net present value or PV assuming a 10% rate of return? c. Should the plant manager accept or reject the project? d. What else should the manager consider in the analysis?
The plant manager of IHK is considering the purchase of a new robotic assemble plant. The new robotic line will cost $750,000. The manager believes that the new investment will result in direct labor savings of $187,500 per year for ten years. Requirements: a. What is the payback period for this project b. What is the net present value or PV assuming a 10% rate of return? c. Should the plant manager accept or reject the project? d. What else should the manager consider in the analysis?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
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The plant manager of IHK is considering the purchase of a new robotic assemble plant. The new robotic line will cost $750,000. The manager believes that the new investment will result in direct labor savings of $187,500 per year for ten years.
Requirements:
a. What is the payback period for this project
b. What is the net present value or PV assuming a 10% rate of return ?
c. Should the plant manager accept or reject the project?
d. What else should the manager consider in the analysis?
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