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What is the NPV for the flexible manufacturing system

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Question - Barker Production Company is considering the purchase of a flexible manufacturing system. The annual cash benefits/savings associated with the system are:

Decreased waste $75,000

Increased quality 100,000

Decrease in operating costs 62,500

Increase in on-time deliveries 12,500

The system will cost $750,000 and will last ten years. The company's cost of capital is 10%.

Required -

A. What is the payback period for the flexible manufacturing system?

B. What is the NPV for the flexible manufacturing system?

Reference no: EM133031205

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