Repeat Problem 65 using payback period with no discounting (PBP). a. What is the payback period for
Question:
Repeat Problem 65 using payback period with no discounting (PBP).
a. What is the payback period for this investment?
b. If the maximum attractive PBP is 3 years, what is the decision rule for judging the worth of this investment?
c. Should Bailey buy the gang punch based on PBP?
d. Compare your recommendations resulting from Problems 9, 65, and
Data from problem 65
Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of \($100\),000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Labor costs would increase \($2\),000 per year using the gang punch, but raw material costs would decrease \($12\),000 per year. MARR is 5 percent/year.
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt