A company is planning to reduce production bottlenecks and increase production capacity. The project team has...

 

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A company is planning to reduce production bottlenecks and increase production capacity. The project team has proposed three proposals as tabulated. Employing the payback method, discuss and evaluate which proposal is more suitable to be accepted. Details Proposal 1 Proposal 2 Cost of materials $18,000 $20,000 Period of revenue increase (year) Est. saving in wage Add. cost to run machine Est. saving in waste Increase in revenue Proposal 1 (S) 2 (S) 5 1,000 3,000 $20,000 3,000 7,000 $5,000 $4,000 $10,000 End of Year End of Year End of Year 1 2 3 8 5,000 6,000 $25,000 $7,500 $6,000 $20,000 Few years later, the company decided to expand its operations. Two investment proposal are presented as follow. Both proposals start with an initial investment of $20,000. Employing the present worth method, discuss and evaluate which is the better proposal. End of Year 4 Proposal 3 $20,000 6,000 5,000 7 $28,000 $10,000 $8,000 $23,000 End of Year 5 6,000 3,000 A company is planning to reduce production bottlenecks and increase production capacity. The project team has proposed three proposals as tabulated. Employing the payback method, discuss and evaluate which proposal is more suitable to be accepted. Details Proposal 1 Proposal 2 Cost of materials $18,000 $20,000 Period of revenue increase (year) Est. saving in wage Add. cost to run machine Est. saving in waste Increase in revenue Proposal 1 (S) 2 (S) 5 1,000 3,000 $20,000 3,000 7,000 $5,000 $4,000 $10,000 End of Year End of Year End of Year 1 2 3 8 5,000 6,000 $25,000 $7,500 $6,000 $20,000 Few years later, the company decided to expand its operations. Two investment proposal are presented as follow. Both proposals start with an initial investment of $20,000. Employing the present worth method, discuss and evaluate which is the better proposal. End of Year 4 Proposal 3 $20,000 6,000 5,000 7 $28,000 $10,000 $8,000 $23,000 End of Year 5 6,000 3,000