New manufacturing equipment: compute payback period, NPV
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My company is considering purchasing new manufacturing equipment that costs $1300000 and is expected to improve cash flows by $500000 in year 1, $350000 in year 2, $475000 in year 3, $450000 in year 4, $300000 in year 5.
Key financial metrics for this capital budgeting project have been calculated and provided by the finance department. A 14% rate of return and a payback period of less than five years are required for the project. These key metrics must include
(1) payback period,
(2) net present value, and
(3) internal rate of return. (use 6% as the weighted average cost of capital)
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Education
- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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