Question: A new optical reader for scanning documents is being considered by a retail bank. The new system has a fixed cost of 30,000 per year

A new optical reader for scanning documents is being considered by a retail bank. The new system has a fixed cost of €30,000 per year and a variable cost of €2.5 per batch. The cost of the new scanner is €100,000. The bank charges €10 per batch for scanning documents and it believes that the demand for its scanning services will be 2000 batches in year 1 5000 batches in year 2, 10,000 batches in year 3 and then 12,000 batches per year from year 4 onwards. If the realistic discount rate for the bank is 6 per cent, calculate the net present value of the investment over a five-year period.

Step by Step Solution

★★★★★

3.51 Rating (161 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To calculate the net present value NPV of the investment in the new optical reader for scanning documents over a fiveyear period youll need to conside... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Operations Management Questions!

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

In view of the information provided below provide suggestions for the efficient management of trade debtors. INFORMATION MANAGEMENT OF TRADE DEBTORS Debtor management is central to the effective cash...

Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...

1. A loan application process involves 8 separate tasks. Task A takes 10 minutes and does not require any other of the tasks to be performed before it can be started. Similarly, Task B can be started...

A new optical reader for scanning documents is being considered by a retail bank. The new system has a fixed cost of 3 0 , 0 0 0 per year and a variable cost of 2 . 5 per batch. The cost of the new...

A new optical reader for scanning documents is being considered by a retail bank. The new system has a fixed cost of 30,000 per year and a variable cost of 2.5 per batch. The cost of the new scanner...

=+ 5 A new optical reader for scanning documents is being considered by a retail bank. The new system has a fixed cost of 30,000 per year and a variable cost of 2.5 per batch. The cost of the new...

Help Save & Exit Saved 40 Check my Aylmer-in-You (AIY) Inc. projects unit sales for a new opera tenor emulation implant as follows: Year Unit Sales 1 114,000 130,000 141,000 163,000 102,000 ed 2 3 4...

9 : 3 5 Fri Jan 1 2 bafykbzacedsocoximcuxrlrrrwkbbp 3 cy . . . 8 5 % Week 1 - Chapter 1 , Exercises 1 - 1 1 Chapter 4 Cost - Volume - Profit Analysis: A Managerial Planning Tool 1 5 7 income, and...

Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 1 74,000 2 87,000 3 101,000 4 96,000 5 77,000 Production of the implants...

Prepare a comparative common-size income statement for Fashion Music Co. Using the 2010 and 2009 data of Exercise and rounding to four decimalplaces. Fashion Music Co. Comparative Income Statements...

In a binary mixture, the density of ethanol is 0.7880 g cm -3 at 20.0 0 C. Its equilibrium vapor pressure at 20.0 0 C is 40.0 torr. Calculate the change in its chemical potential at this temperature...

62. Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her Social Security number is 123456789. Roberta has been divorced from her former husband, Wayne, for...

Organizations have varying ethical orientations or ethical climates that affect their ethical decision making and behavior. Climates marked by self-interest are most likely to encourage unethical...

A sports apparel company has received an order for a college basketball teams national championship T-shirt. The company can purchase the T-shirts from textile factories in Mexico, Puerto Rico, and...

Walshs Fruit Company contracts with growers in Ohio, Pennsylvania, and New York to purchase grapes. The grapes are processed into juice at the farms and stored in refrigerated vats. Then the juice is...

Solve Problem 3-31 in Chapter 3 to construct an x-bar chart in conjunction with an R-chart for delivery time at the Great Outdoors Clothing Company.

Question 2) (25 points) Decorative Steel has the following information: Beginning Inventory Jan, 2016: $600,000 Purchases made during the year 2016: $1,200,000 Ending Inventory on December 31, 2016:...

The design of the costing system (cost flow, cost centres, cost drivers, cost assignment procedure, etc.) and what is the implementation and operation of the costing system (success and challenges)

Required information The following information applies to the questions displayed below.) Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc) on January ,...