Bellamy Company Is Considering the Purchase of a Computerized Manufacturing

question 66

Multiple Choice

Bellamy Company is considering the purchase of a computerized manufacturing system. The after-tax cash benefits/savings associated with the system are as follows: $$\begin{array} { l r } \text { Decreased waste } & \$ 300,000 \\\text { Increased quality } & 400,000 \\\text { Decrease in operating costs } & 600,000 \\\text { Increase in on-time deliveries } & 200,000\end{array}$$ The system will cost $9,000,000 and will last ten years. The company's cost of capital is 12 percent. What is the NPV for the computerized manufacturing system?

• A)($525,000)
• B)($5,610,000)
• C)$8,475,000
• D)$9,000,000

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