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Should the manager purchase the technology

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Reference no: EM132992699

The manager of Manufacturing products is contemplating the purchase of new technology will cost RM 278 000 and has a useful life of five years. The technology will yield (year-end) cost reductions of RM 45 000 in year 1, RM 52 000 in year 2, RM 58 000 in year 3, and RM 64 000 in years 4 and 5.

Problem 1: What is the present value of the cost savings of the technology if the interest rate is 6 per cent? Should the manager purchase the technology?

 

Reference no: EM132992699

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