The plant manager of Taiwan Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $ 1,400,000. The manager believes that the new investment will result in direct labor savings of $ 350,000 per year for 10 years.
a. What is the payback period on this project?
b. What is the net present value, assuming a 10% rate of return? Use the present value of an annuity of $ 1 table in Exhibit 2.
c. What else should the manager consider in the analysis?

  • CreatedJune 27, 2014
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