Solved: What is the payback period and net present value, Financial Accounting

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What is the payback period and net present value

Response to the following problem:

The plant manager of Jurassic Industries is considering the purchase of new automated assembly equipment. The new equipment will cost $3,437,500. The manager believes that the new investment will result in direct labor savings of $625,000 per year for 10 years.

a. What is the payback period on this project?

b. What is the net present value, assuming a 10% rate of return? Use the present value tables .

c. What else should the manager consider in the analysis?

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Financial Accounting: What is the payback period and net present value

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Financial Accounting: What is the payback period and net present value

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