Example: A chemical company wants to install a computer aided process control system for product A. The facility spends 40% of its production time (or 3500 operating hours) producing this product. In the remaining 60%, different products are produced. 30000 kg of product A is produced annually and sold at 15 TL/kg. The cost of the computer aided system is 650000 TL and the expected benefits are given below: - Sales price of product A will increase by 2 TL/kg- Production volume will increase by 4000 kg/year - The number of operators will decrease and there will be 25 TL/hour earnings. Let the annual maintenance cost of the system be 53000 TL/year and the expected lifetime of the system is 8 years. What would the net cash flow be for each year?
Example: A chemical company wants to install a computer aided process control system for product A. The facility spends 40% of its production time (or 3500 operating hours) producing this product. In the remaining 60%, different products are produced. 30000 kg of product A is produced annually and sold at 15 TL/kg. The cost of the computer aided system is 650000 TL and the expected benefits are given below: - Sales price of product A will increase by 2 TL/kg- Production volume will increase by 4000 kg/year - The number of operators will decrease and there will be 25 TL/hour earnings. Let the annual maintenance cost of the system be 53000 TL/year and the expected lifetime of the system is 8 years. What would the net cash flow be for each year?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
2
Transcribed Image Text:Example: A chemical company wants to install a computer aided process control system for
product A. The facility spends 40% of its production time (or 3500 operating hours)
producing this product. In the remaining 60%, different products are produced. 30000 kg
of product A is produced annually and sold at 15 TL/kg. The cost of the computer aided
system is 650000 TL and the expected benefits are given below:
- Sales price of product A will increase by 2 TL/kg-
Production volume will increase by 4000 kg/year
- The number of operators will decrease and there will be 25 TL/hour
earnings. Let the annual maintenance cost of the system be 53000 TL/year and the expected lifetime of the system is
8 years. What would the net cash flow be for each year?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education