Jamison Specialties manufactures programmable incremental encoders that resist shock and vibration for use in harsh environments. Five years ago, the company invested $650,000 in an automated quality control system and recorded savings of $105,000 per year for the 5 years. The equipment now has a salvage value of $50,000. (a) What is the rate of return per year on the investment? (b) The owner expected to make at least 15% per year on this quality improvement investment. What annual savings were necessary to meet the 15% goal?
Jamison Specialties manufactures programmable incremental encoders that resist shock and vibration for use in harsh environments. Five years ago, the company invested $650,000 in an automated quality control system and recorded savings of $105,000 per year for the 5 years. The equipment now has a salvage value of $50,000. (a) What is the rate of return per year on the investment? (b) The owner expected to make at least 15% per year on this quality improvement investment. What annual savings were necessary to meet the 15% goal?
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
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Question
Jamison Specialties manufactures programmable
incremental encoders that resist shock and vibration
for use in harsh environments. Five years ago,
the company invested $650,000 in an automated
quality
now has a salvage value of $50,000.
(a) What is the
investment?
(b) The owner expected to make at least 15% per
year on this quality improvement investment.
What annual savings were necessary to meet
the 15% goal?
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