An industrial company is considering starting a project to redesign and improve a production linethat is currently operating in its factory. The company is expected to invest an initial amount of SAR200,000 to improve the production line and is expected to spend another SAR 44,000 annually forthe first four (4) years. The improved production line project is expected to generate revenues ofSAR 140,000 in the first year, SAR 190,000 in the second year, SAR 280,000 in the third year, andanother SAR 350,000 in the fourth year. Knowing that the discount rate is 8% or 0.08.Calculate the net present value [NPV] and return on investment [ROI] for the project and assesswhether the results of the financial analyzes for this project motivate the project to move forward.

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Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter5: Network Models

Section5.3: Assignment Models

Problem 18P

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