Crassula PLC has experienced exponential growth in demand for its products that means that it has outgrown its current operational facility and is considering investing in upgraded machinery. The following capital expenditure plans are for the next 6 years.

 

 

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Crassula PLC has experienced exponential growth in demand for its products that means that it has outgrown its current operational facility and is considering investing in upgraded machinery. The following capital expenditure plans are for the next 6 years. The company has a weighted average cost of capital of 8%. Machine 1: Bespoke Build Design costs Build costs** Installation costs Delivery costs of machine Staff training and health and safety costs to operate the new machine* Incremental contribution increased capacity per annum Incremental overheads per annum Increased working capital requirement Depreciation per annum Anticipated resale value in 6 years Energy efficiency rating Machine 2. Adaptation of an existing off the shelf machine Adaptation costs Price of machine*** Installation costs Delivery costs of machine Staff training and health and safety costs to operate the new machine* Incremental contribution increased capacity per annum Incremental overheads per annum Increased working capital requirement Depreciation per annum Anticipated resale value in 6 years Energy Efficiency rating 14,000 150,000 6,200 1,200 3,000 161,200 98,000 82,000 20,000 51,400 AA 7,000 100,000 3,100 1,000 1,000 142,000 91,000 62,000 13,333 30,200 AAA

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