If MAM can afford to do either the warehouse/vehicle or the manufacturing project, which one should...

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If MAM can afford to do either the warehouse/vehicle or the manufacturing project, which one should they choose? Why? their manufacturing faciltiy to reduce manufacturing spending (fewer employees. less waste) for their existing oven product line. MAM will spend $1,350,000 this year to purchase and install the robots. Expected Savings from the new robots for the next 6 years is as follows Year Ovens Manufactured/Sold Savings/Oven (Ss) Total Savings 2 560 3 5 610 $425.00 4 545 575 595 630 $425.00 $231,625 $425.00 $425.00 $244,375 $425.00 $252,875 $425.00 $267,750 $238,000 $259,250 ) MAM'S Chief Financial Officer (CFO) has decided on an return to evaluate this project. 8% required rate of What were the major factors that might have led to this decision? Risks: Ovens Manufactured/Sold be more or less than expected Savings more or less than expected. (6) What does the choice of the required rate of return suggest about how the CFO sees this risk of this project? Moderate - similar to risk of US equities market () Should MAM invest in the additional robots? Why or why not? Present Value Expected Savings Year O Spending ENet Present Value $1,143,547 $1,350,000 -$206,453 Do not invest Net present value less than zero If MAM can afford to do either the warehouse/vehicle or the manufacturing project, which one should they choose? Why? their manufacturing faciltiy to reduce manufacturing spending (fewer employees. less waste) for their existing oven product line. MAM will spend $1,350,000 this year to purchase and install the robots. Expected Savings from the new robots for the next 6 years is as follows Year Ovens Manufactured/Sold Savings/Oven (Ss) Total Savings 2 560 3 5 610 $425.00 4 545 575 595 630 $425.00 $231,625 $425.00 $425.00 $244,375 $425.00 $252,875 $425.00 $267,750 $238,000 $259,250 ) MAM'S Chief Financial Officer (CFO) has decided on an return to evaluate this project. 8% required rate of What were the major factors that might have led to this decision? Risks: Ovens Manufactured/Sold be more or less than expected Savings more or less than expected. (6) What does the choice of the required rate of return suggest about how the CFO sees this risk of this project? Moderate - similar to risk of US equities market () Should MAM invest in the additional robots? Why or why not? Present Value Expected Savings Year O Spending ENet Present Value $1,143,547 $1,350,000 -$206,453 Do not invest Net present value less than zero If MAM can afford to do either the warehouse/vehicle or the manufacturing project, which one should they choose? Why? their manufacturing faciltiy to reduce manufacturing spending (fewer employees. less waste) for their existing oven product line. MAM will spend $1,350,000 this year to purchase and install the robots. Expected Savings from the new robots for the next 6 years is as follows Year Ovens Manufactured/Sold Savings/Oven (Ss) Total Savings 2 560 3 5 610 $425.00 4 545 575 595 630 $425.00 $231,625 $425.00 $425.00 $244,375 $425.00 $252,875 $425.00 $267,750 $238,000 $259,250 ) MAM'S Chief Financial Officer (CFO) has decided on an return to evaluate this project. 8% required rate of What were the major factors that might have led to this decision? Risks: Ovens Manufactured/Sold be more or less than expected Savings more or less than expected. (6) What does the choice of the required rate of return suggest about how the CFO sees this risk of this project? Moderate - similar to risk of US equities market () Should MAM invest in the additional robots? Why or why not? Present Value Expected Savings Year O Spending ENet Present Value $1,143,547 $1,350,000 -$206,453 Do not invest Net present value less than zero If MAM can afford to do either the warehouse/vehicle or the manufacturing project, which one should they choose? Why? their manufacturing faciltiy to reduce manufacturing spending (fewer employees. less waste) for their existing oven product line. MAM will spend $1,350,000 this year to purchase and install the robots. Expected Savings from the new robots for the next 6 years is as follows Year Ovens Manufactured/Sold Savings/Oven (Ss) Total Savings 2 560 3 5 610 $425.00 4 545 575 595 630 $425.00 $231,625 $425.00 $425.00 $244,375 $425.00 $252,875 $425.00 $267,750 $238,000 $259,250 ) MAM'S Chief Financial Officer (CFO) has decided on an return to evaluate this project. 8% required rate of What were the major factors that might have led to this decision? Risks: Ovens Manufactured/Sold be more or less than expected Savings more or less than expected. (6) What does the choice of the required rate of return suggest about how the CFO sees this risk of this project? Moderate - similar to risk of US equities market () Should MAM invest in the additional robots? Why or why not? Present Value Expected Savings Year O Spending ENet Present Value $1,143,547 $1,350,000 -$206,453 Do not invest Net present value less than zero

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