Business, 02.03.2020 20:58 abalth2154

A manufacturing company is considering to invest in a CNC machine. The initial investment is $450, 000 dollars and the company will finance 50% of the investment with a bank loan at 12% interest rate compounded semiannually to be paid with 20 equal semiannual payments. The annual operating costs estimated for the first year are $20,000, which will increase by $2,500 per year during the next 9 years. The company estimates that the CNC will generate extra annual net income 100,000 during the first year, and that they will increase at a rate of 3% per year during the life of the project. The CNC will be sold at the end of the 10th year at a salvage value of 20% of the original cost. The company MARR is 12%. Perform an investment analysis and make a recommendation to the company about the economical feasibility of investment in the CNC machine. Your analysis must include the following measures of worth: a) Present worth b) Annual worth c) Future worth d) External rate of return

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A manufacturing company is considering to invest in a CNC machine. The initial investment is $450, 0...

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