The manufacturing company you work for has won a $5-$year contract to produce formed, aluminium casings for a customer. To fulfil this contract your company will need to purchase a new machine.

You have been asked to find out if it will be worth purchasing the machine. Ignore machine depreciation.

You have been given the following figures:

Costs:

The new machine will cost $$500,000$ to purchase and will cost $$30,000$ per year to maintain.

Gains:

The machine produces $10,000$ casings a year. These are sold at a profit of $$25$ each.

Calculate the return on investment after $5$ years. State this as a percentage to $2$ decimal places.

 

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To calculate the return on investment ROI after 5 years we need to determine the t... View the full answer