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6. A large electronic retailer is considering the purchase of software that will minimize shipping expenses in its supply chain network. This software, including installation and training would be a $10 million investment for the retailer. If the firm nominal interest is 15% per year and the life of the software is four years, what annual savings in shipping expenses must there be justify the purchase of the software?
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- A large electronic retailer is considering the purchase of software that will minimize shipping expenses in its supply chain network. This software, including installation and training, would be a $10-million investment for the retailer. If the firm’s effective interest rate is 15% per year and the life of the software is four years, what annual savings in shipping expenses must there be to justify the purchase of the software?A large electronic retailer is considering the purchase of software that will minimize shippingexpenses in its supply chain network. This software, including installation and training, wouldbe a RM10-million investment for the retailer.Calculate how much annual savings in shipping expenses must there be to justify the purchaseof the software if the firm’s effective interest rate is 15% per year and the life of the softwareis four yearA computer call center is going to replace all of its incandescent lamps with more energy-efficient fluorescent lighting fixtures. The total energy savings are estimated to be $1,875 per year, and the cost of purchasing and installing the fluorescent fixtures is $4,900. The study period is five years, and terminal market values for the fixtures are negligible. Solve, a. What is the IRR of this investment? b. What is the simple payback period of the investment? c. Is there a conflict in the answers to Parts (a) and (b)?List your assumptions. d. The simple payback “rate of return” is 1/θ. How close does this metric come to matching your answer in Part (a)?
- A computer call center is going to replace all of its incandescent lamps with more energy- efficient fluorescent lighting fixtures. The total energy savings are estimated to be $1,875 per year, and the cost of purchasing and installing the fluorescent fixtures is $4,900. The study period is five years, and terminal market values for the fixtures are negligible. Solve, a. What is the IRR of this investment? b. What is the simple payback period of the investment? c. Is there a conflict in the answers to Parts (a) and (b)?List your assumptions. d. The simple payback "rate of return" is 1/0. How close does this metric come to matching your answer in Part (a)?A firm might purchase a computerized quality control system. The proposed system will cost $76,000, but is expected to save $22,000 each year in reduced overtime. The firm requires that all cost reduction projects have a discounted payback of no more than 4 years with a 10% interest rate. Should the firm invest in the new system?A computer call center is going to replace all of its incandescent lamps with more energy efficient fluorescent lighting fixtures. The total energy savings are estimated to be $2,084 per year, and the cost of purchasing and installing the fluorescent fixtures is $4,500. The study period is four years, and terminal market values for the fixtures are negligible. a. What is the IRR of this investment? b. What is the simple payback period of the investment? c. Is there a conflict in the answers to Parts (a) and (b)? List your assumptions. d. The simple payback "rate of return" is 1/0. a. The IRR of the investment is%. (Round to one decimal place.) b. The simple payback period of the investment is years. (Round up to the next whole number.) c. Select all the correct assumptions below. A. The value of 0 may indicate a poor project in terms of liquidity. B. The value of 0 may indicate the best project in terms of liquidity. C. The IRR will signal an acceptable (profitable) project if the MARR…
- The International Parcel Service has installed a new radio frequency identification system to help reduce the number of packages that are incorrectly delivered. The capital investment in the system is $65,000, and the projected annual savings are tabled below. The system’s market value at the EOY five is negligible, and the MARR is 18% per year. Solve, a. What is the FW of this investment? b. What is the IRR of the system? c. What is the discounted payback period for this investment?9. A company that sells high-purity laboratory chemicals is considering investing in new equipment that will reduce cardboard costs by better matching the size of the products to be shipped to the size of the shipping container. If the new equipment will cost Php1M to purchase and install, how much must the company save each year for 3 years in order to justify the investment, if the interest rate is 10% per year? A Php66465.26 B Php88465.26 Php302114.80 Php402114.80eEgg is considering the purchase of a new distributed network computer system to help handle its warehouse inventories. The system costs $60,000 to purchase and install and $30,000 to operate each year. The system is estimated to be useful for 4 years. Management expects the new system to reduce the cost of managing inventories by $62,000 per year. The firm’s cost of capital (discount rate) is 10%. Required: 1. What is the net present value (NPV) of the proposed investment under each of the following independent situations? (Use the appropriate present value factors from Appendix C, TABLE 1 and Appendix C, TABLE 2.) 1a. The firm is not yet profitable and therefore pays no income taxes. 1b. The firm is in the 30% income tax bracket and uses straight-line (SLN) depreciation with no salvage value. Assume MACRS rules do not apply. 1c. The firm is in the 30% income tax bracket and uses double-declining-balance (DDB) depreciation with no salvage value. Given a four-year life, the DDB…
- A computer call center is going to replace all of its incandescent lamps with more energy efficient fluorescent lighting fixtures. The total energy savings are estimated to be $1,875 per year, and the cost of purchasing and installing the fluorescent fixtures is $4,900. The study period is five years, and terminal values for the fixtures are negligible.a. What is the IRR of this investment?b. What is the simple payback period of the investment?Home Automation is considering an investment of $500,000 in a new product line. The company will make the investment only if it will result in a rate of return of 15% per year or higher. If the revenue is expected to be between $138,000 and $165,000 per year for 5 years, use a present worth analysis to determine if the decision to invest is sensitive to the projected range of revenue.Labco Scientific sells high-purity chemicals to universities, research laboratories, and pharmaceutical companies. The company wants to invest in new equipment that will reduce shipping costs by better matching the size of the completed products with the size of the shipping container. The new equipment is estimated to cost $450,000 to purchase and install. How much must Labco save each year for 3 years in order to justify the investment at an interest rate of 10% per year?