Question

Sepchek Oil Field Services is considering the installation of a new electronic surveillance system for its warehouse. The system has an initial cost of $ 160,000 and an expected life of five years. For its life, the system will save the company labor costs for security guards.
a. If the company’s cost of capital is 10 percent, how much annual increase in cash flows is necessary to minimally justify the investment?
b. Based on your answer to (a), what would be the payback period for this investment?



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  • CreatedJune 03, 2014
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