Question: GE Power is installing a new sensor system in its factory for $50,000 that will save $40,000 per year in costly leaks of raw materials.

GE Power is installing a new sensor system in its factory for $50,000 that will save $40,000 per year in costly leaks of raw materials. The savings will grow by 3% each year, concurrent with production growth over 10-year life of the sensor GE Power estimates a 13% cost of capital for the project and has a tax rate of 21%. The company will depreciate the sensor using the straight-line method over its 10-year life and it will have no re-sale value at the end of 10 years. Use this information to calculate the following key pieces of information:

1) The CFFA in year 1. (Exclude the initial investment, just focus on the savings in year 1)

2) The NPV of the entire project (including initial investment)?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

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 Finance Questions!

GE Power is installing a new sensor system in its factory for $50,000 that will save $40,000 per year in costly leaks of raw materials. The savings will grow by 3% each year, concurrent with...

GE Power is installing a new sensor system in its factory for $50,000 which will save $40,000 per year in costly leaks of raw materials. The savings will grow by 3% each year, concurrent with...

GE Power is installing a new sensor system in its factory for $50,000 that will save $40,000 per year in costly leaks of raw materials. The savings will grow by 3% each year, concurrent with...

Sustainability & Corporate Social Responsibility at GE \"GE should be commended for a bold approach to climate issues. However, the company has a long way to go before it can legitimately claim to be...

ITM 309: Business Information Technology and Systems Spring 2016 Watson and the new era of cognitive systems Jerry Haan IBM Cloud Ecosystem Development January 27, 2016 2013 International Business...

Scenario You and your group work for a multi-national consulting firm. Your team is a group of capital budget consultants and are seeking new engagements. You intend on responding to a Request for...

For this assignment, you will read the Electrolux and GE Appliances case study, which offers an analysis of the Electrolux?s valuation process during its acquisition of GE Appliances in August of...

INTRODUCTION Driving back to Knoxville on Friday afternoon, Morgan finally had some time to think. Shed spent most of the week in Nashville meeting with many of the Tennessee Valley Authoritys (TVA)...

For this assignment, you will write a case analysis. You have a choice of using Case 27 in your textbook, 3M - The First 110 Years, or choosing a case from the list below. Then, write a comprehensive...

OPERATIONS MANAGEMENT ASSIGNMENT 6 1 Human resources, project management and operations management are all equally vital to a business's success. Each of these focuses on different areas of the...

On 1st Jan, 2010, Green Products Ltd, Issued, Debentures/Bonds of Rs. 5,00,000 redeemable at par at the end of 6 years, and it was resolved that a Sinking Fund should be formed and invested in tax...

A firm has $90,000 in direct materials costs and $60,000 in direct labor costs, with another $30,000 in overhead in 2022. It has equipment that was purchased for $900,000 and is being depreciated...

False positives refer to: positive confirmations incorrectly received from client vendors items incorrectly identified as notable items negative confirmations incorrectly received from client vendors...

Add "Viggo Mortenslet cast = new Map ( ) ;en " to the cast as the key, with value "Aragorn".