Developing a net operating costs


Assignment:

A new inventory management system for ABC Company could be developed at a cost of $260,000. The estimated net operating costs and estimated net benefits over six years of operation would be:

Year

Estimated Net Operating Costs

Estimated Net Benefits

0

$2,60,000

$0

1

7,000

42,000

2

9,400

78,000

3

11,000

82,000

4

14,000

115,000

5

15,000

120,000

6

25,000

140,000

a. What would the payback period be for this investment? Would it be a good or bad investment? Why?

b. What is the ROI for this investment?

c. Assuming a 15% discount rate, what is this investment's NPV?

Solution Preview :

Prepared by a verified Expert
Operation Management: Developing a net operating costs
Reference No:- TGS02985613

Now Priced at $25 (50% Discount)

Recommended (91%)

Rated (4.3/5)

2015 ┬ęTutorsGlobe All rights reserved. TutorsGlobe Rated 4.8/5 based on 34139 reviews.