The engineering team at Manuels Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP) system.
Question:
The engineering team at Manuel’s Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP) system. The software and installation from Vendor A costs \($380\),000 initially and is expected to increase revenue \($125\),000 per year every year. The software and installation from Vendor B costs \($280\),000 and is expected to increase revenue \($95\),000 per year. Manuel’s uses a 4-year planning horizon and a 10 percent per year MARR.
a. What is the discounted payback period of each investment?
b. Which ERP system should Manuel purchase if his decision rule is to select the system with the shortest DPBP?
c. Does this decision agree or disagree with the results of the present worth analysis in Problem 25?
Data from Problem 25
The engineering team at Manuel's Manufacturing, Inc., is planning to purchase an enterprise resource planning (ERP) system. The software and installation from Vendor A costs \(\$ 380,000\) initially and is expected to increase revenue \(\$ 125,000\) per year every year. The software and installation from Vendor B costs \(\$ 280,000\) and is expected to increase revenue \(\$ 95,000\) per year. Manuel's uses a 4-year planning horizon and a 10 percent per year MARR.
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt