A plastic manufacturing company has made a strategic decision

A plastic manufacturing company has made a strategic decision to purchase a fleet of 3- D printers and use these printers to produce small and medium products for customers, instead of using traditional injection-mold techniques. Your Project Manager has projected that the new system will reduce labor costs by $80,000 each year over the next five years (Years 1-5). The purchase price (including installation and testing) of the new 3-D printers is $75,750. The printers are expected to have a useful life of 10 years, after which time they will be sold in the secondary market for $12,500.

What is the net present value of this investment if the discount rate is 9.5% per year?

Here’s the SOLUTION

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