could you help with this homework question?The project you manage require $10,000 in capital outlay, $30,000 in equipment, and $10,000 in training during the first year.Each subsequent year will incur additional labor cost of $5,000 per year, reduce material costs by $15,000, and increase revenue by $20,000 per year.Assume NPV is discounted by 5%. Please include your formula for the payback method conduct a cost-benefit analysis using the payback method and the net present value method for

Cost-benefit analysis is a sensitivity analysis that helps in evaluating the benefits of a project…

Answered: could you help with this homework…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 10P: Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year...

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could you help with this homework question?

The project you manage require $10,000 in capital outlay, $30,000 in equipment, and $10,000 in training during the first year.
Each subsequent year will incur additional labor cost of $5,000 per year, reduce material costs by $15,000, and increase revenue by $20,000 per year.
Assume NPV is discounted by 5%. Please include your formula for the payback method
conduct a cost-benefit analysis using the payback method and the net present value method for

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Where did the $30,000 for the annual benefits come from? Also, I though the formula for the payback method was payback method = (cost of implementing solution) / (annual financial benefits – annual costs). Is this what was used here?

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basically you copy pasted without reading my follow up question:

where did the $600,000 come from?

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Thank you for the solution.

I did not understand how you got the figure of $600,000 at the following part

NPV=Annual benefitsr-Total cost=$30,0005%-($10,000+$30,000+$10,000)=$600,000-$50,000=$550,000

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