How much will npv be improved under this leaner process

Assignment Help Finance Basics

Reference no: EM133325755

Question: The concept of lean manufacturing includes a desire to minimize net working capital (NWC). For example, raw materials, inventory, and spare parts are all considered part of NWC. A firm that is "lean" will only keep the bare minimum of these items in stock, and will only reorder as necessary. Done successfully, lean manufacturing can help increase the NPV of project. Say an investment in NWC of $86,000 is required at the beginning of a 5-year project (cash outflow), which gets returned at the end of the project (cash inflow). Now say that an operations manager believes that a leaner process can be used in the project. As a result, the NWC investment (and its return) will be cut to $45,000. If the operations manager is correct, by how much will NPV be improved under this leaner process, if the project's WACC is 10%?

Reference no: EM133325755

Questions Cloud

Demonstrable experience with linux operating systems : Demonstrable experience with Linux Operating Systems (Ubuntu, CentOS, RedHat or AWS Linux) Experience creating and maintaining containers in a Docker/Kubernetes

How a bank can reduce liquidity problems : How a bank can reduce liquidity problems without increasing the cost of funds. You need to give us at least ten ways to increase liquidity. All of them must

Write a code for solving the black-scholes-merton pde : Write a code for solving the Black-Scholes-Merton PDE for European Put option via the implicit finite difference scheme.

What is the difference between a table and a view : What keyword in a SQL query do you use to extract date from a database table? What is the difference between a table and a view?

How much will npv be improved under this leaner process : FIN 140 Wichita State University will be cut to $45,000. If the operations manager is correct, by how much will NPV be improved under this leaner process

What are the six basic elements of the ea3 architecture : What are the six basic elements of the EA3 Architecture Framework? With regard to the COBIT Framework, what do the following acronyms stand for

What are the basic units of society : What are the basic units of society? Individuals or wholes (family, groups)? How do people initiate, develop, and maintain relationships with others?

Estimate that the risk-free rate is 5 : What is the current value of one share of this stock if you estimate that the risk-free rate is 5%, beta is 2 and the market risk premium is 10%?

Write a complete mips program that reads a string from user : Write a complete MIPS program that reads a string from the user (do not prompt, just read it), then capitalizes all lower-ease alphabetic characters

User Account

All Pages