OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $5.8 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $760,000 per year in direct labor costs. The company requires a 10% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) a. Compute the proposed investment's net present value. b. Using the answer from part a, is the investment's internal rate of return higher or lower than 10%? Complete this question by entering your answers in the tabs below. Required A Required B Compute the proposed investment's net present value. Net present value $ Required A Required B >

OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $5.8 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $760,000 per year in direct labor costs. The company requires a 10% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) a. Compute the proposed investment's net present value. b. Using the answer from part a, is the investment's internal rate of return higher or lower than 10%? Complete this question by entering your answers in the tabs below. Required A Required B Compute the proposed investment's net present value. Net present value $ Required A Required B >

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Vijay
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