Bramer Corporation's controller, Mara, was asked to prepare a capital investment analysis for a robot-guided aluminum window machine. This machine would automate the entire window-casing manufacturing line. Mara has just returned from an international seminar on qualitative inputs into the capital investment decision and the value chain. She is eager to incorporate these new ideas into the analysis. In addition to the normal net present value analysis (which produced a significant negative result), Mara factored in figures for customer satisfaction, scrap reduction, reduced inventory needs, and reputation for quality.

With the additional information included, the analysis produced a positive result for the investment.

Do you think these other factors should be included in Mara's analysis? Elaborate on why or why not.

Usually, when performing capital investment analysis, businesses consider more than just cash-flows and profitability. Qualitative variables are those factors which cannot be represented when making a decision in statistics.

Answer rating: 100% (QA)

solution I trust the extra factors ought not be included A NPV examinat... View the full answer