Birch Manufacturing Is Considering the Addition of Another Product Line

question 36

Short Answer

Birch manufacturing is considering the addition of another product line to its offerings.Equipment needed to produce the new line will cost $200,000.Birch estimates that the net cash inflows from the new product line will be as follows:

a.What is the payback period for the new product line?
b.If the company can establish a steady customer base before production starts and the cash inflows will be $15,000 per year for years 1 - 15,what will be the payback period?

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Definitions:

Five-factor Model

A theory in psychology that identifies five main dimensions of human personality: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Personality Changes

Refers to alterations in an individual's behavioral patterns, thoughts, and feelings over time.

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The concept that an individual's basic personality traits tend to remain relatively consistent throughout adulthood.

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The act of exchanging private information or feelings with another, often building trust and intimacy in a relationship.