Cash Payback Period, Net Present Value Analysis, and Qualitative ConsiderationsThe plant manager of Shenzhen Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $260,000. The manager believes that the new investment will result in direct laborsavings of $52,000 per year for 10 years.Present Value of an Annuity of $1 at Compound InterestYear6%15%10.9431.8332.6733.465234567894.2124.9175.5826.2106.8027.36010%0.9091.7362.4873.1703.7914.3554.8685.3355.7596.14512%0.8931.6902.4023.0373.6054.1114.5644.9685.3285.6500.8701.6262.2832.8553.3533.7854.1604.4874.77210a. What is the payback period on this project?5 ✔ years5.01920%0.8331.5282.1062.5892.9913.3263.6053.8374.0314.192b. What is the net present value, assuming a 12% rate of return? Use the table provided above. Round to the nearest whole dollar.Net present value $582,104 Xc. What else should the manager consider in the analysis?Taxes and Maintenance costs

Pay back period refers to time period in which initial investment of the project is recovered by the…

Answered: The plant manager of Shenzhen…

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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