could you help with this homework question? The project you manage require $10,000 in capital outlay, $30,000 in equipment, and $10,000 in training during the first year. Each subsequent year will incur additional labor cost of $5,000 per year, reduce material costs by $15,000, and increase revenue by $20,000 per year. Assume NPV is discounted by 5%. Please include your formula for the payback method conduct a cost-benefit analysis using the payback method and the net present value method for
could you help with this homework question? The project you manage require $10,000 in capital outlay, $30,000 in equipment, and $10,000 in training during the first year. Each subsequent year will incur additional labor cost of $5,000 per year, reduce material costs by $15,000, and increase revenue by $20,000 per year. Assume NPV is discounted by 5%. Please include your formula for the payback method conduct a cost-benefit analysis using the payback method and the net present value method for
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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could you help with this homework question?
- The project you manage require $10,000 in capital outlay, $30,000 in equipment, and $10,000 in training during the first year.
- Each subsequent year will incur additional labor cost of $5,000 per year, reduce material costs by $15,000, and increase revenue by $20,000 per year.
- Assume NPV is discounted by 5%. Please include your formula for the payback method
- conduct a cost-benefit analysis using the payback method and the
net present value method for
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Where did the $30,000 for the annual benefits come from? Also, I though the formula for the payback method was payback method = (cost of implementing solution) / (annual financial benefits – annual costs). Is this what was used here?
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by Bartleby ExpertFollow-up Question
basically you copy pasted without reading my follow up question:
where did the $600,000 come from?
Solution
by Bartleby ExpertFollow-up Question
Thank you for the solution.
I did not understand how you got the figure of $600,000 at the following part
NPV=Annual benefitsr-Total cost=$30,0005%-($10,000+$30,000+$10,000)=$600,000-$50,000=$550,000
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