A Flexible Manufacturing System Is Expected to Cost $25,000,000 but Has

question 5

Multiple Choice

A flexible manufacturing system is expected to cost $25,000,000 but has present values of after-tax cash flow as shown in the table.The interest rate used is 10 percent.What is the payback of this investment?
$$\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Present } \\\text { Value }\end{array} & \begin{array} { c } \text { Net Present } \\\text { Value }\end{array} \\\hline 1 & \$ 11,000,000 & \$ 10,000,100 \\\hline 2 & \$ 9,000,000 & \$ 7,437,600 \\\hline 3 & \$ 7,000,000 & \$ 5,259,800 \\\hline 4 & \$ 5,000,000 & \$ 3,415,000 \\\hline 5 & \$ 3,000,000 & \$ 1,862,700 \\\hline\end{array}$$

• A) Less than two years
• B) Between two and three years
• C) Between three and four years
• D) More than four years

Interpret the relationship between variables using scatter diagrams.

Understand the concept of the coefficient of determination and its importance in regression analysis.

Recognize the difference and significance between graphical and numerical techniques in data analysis.

Understand the role of the correlation coefficient in describing the strength and direction of linear relationships.

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Definitions:

Premium

Refers to a payment made for insurance coverage or an amount paid for a product/service above its standard cost.

Merchandise

Goods to be bought and sold, typically in a retail environment.

Incentive

A reward or benefit offered to motivate or encourage specific actions or behaviors from individuals or groups.

Competitors

Businesses or individuals that offer similar products or services and contend for the same customer base or market share.