Question : Walter White, P.Eng. a process engineer at a large automotive : 7231
Walter White, P.Eng. is a process engineer at a large automotive supplier. He has been charged with evaluating the assembly of clamps on rubber hoses. He has narrowed It down to two options: If the cost of capital is 15%, which is the better option? Tropical Banana Computers (TBC) has long used a criteria that all Investments should have a payback period of less than 5 years. A proposition has recently been put forward that would generate the following set of cash flows: Using TBC's criteria, would you recommend the project go forward? If the opportunity cost is 15%, would you accept or reject? Why would there be a difference? Audrey Raines, P.Eng. is a project engineer at an electronics company. She is evaluating replacing one of the plant's manual assembly lines with automated equipment. The project is expected to cost $500,000 but will have savings of $100,000 per year in labour and $20,000 per year due to quality improvements. If the company's MARR is 8% and the project's life is 6 years, what is the external rate of return? Should Audrey go ahead with this project?