Should Campus Print Shop purchase that new copier?
Not what you're looking for?
Should We Purchase That New Copier?
Campus Print Shop is thinking of purchasing a new, modern copier that automatically collates pages. The machine would cost $22,000 cash. A service contract on the machine, considered a must because of its complexity, would be an additional $200 per month. The machine is expected to last eight years and have a resale value of $4,000. By purchasing the new machine, Campus would save $450 per month in labor costs and $100 per month in materials costs due to increased efficiency. Other operating costs are expected to remain the same. The old copier would be sold for its scrap value of $1,000. Campus requires a return of 14% on its capital investments.
1. As a consultant to Campus, compute:
a. The payback period.
b. The unadjusted rate of return.
c. The net present value.
d. The internal rate of return.
2. On the basis of these computations and any qualitative considerations, would you recommend that Campus purchase the new copier.
Purchase this Solution
Solution Summary
The solution evaluates Capital Budgeting decisions using Net Present Value (NPV), Internal Rate of Return (IRR) and Payback Period
Purchase this Solution
Free BrainMass Quizzes
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.