Question: Cash payback period, net present value analysis, and qualitative considerations The plant manager of Orlando Electronics Company is considering the purchase of new automated

Cash payback period, net present value analysis, and qualitative considerations The plant manager of Orlando Electronics Company is considering the purchase of new automated

Cash payback period, net present value analysis, and qualitative considerations The plant manager of Orlando Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $1,125,000. The manager believes that the new investment will result in direct labor savings of $250,000 per year for 10 years. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. What is the payback period on this project?

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