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Compute the proposed investment net present value

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Question - OptiLux is considering investing in an automated manufacturing system. The system requires an initial investment of $6.0 million, has a 20-year life, and will have zero salvage value. If the system is implemented, the company will save $820,000 per year in direct labor costs. The company requires a 12% return from its investments.

Required -

1. Compute the proposed investment's net present value.

2. Using your answer from part 1, is the investment's internal rate of return higher or lower than 12%?

Reference no: EM133077678

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