To: Ms. Geraldine Pablo
From: Jeff Lenahan
Day: 2/24/2014Re: Piedmont Trailer Production Company Economical Feasibility Evaluation for the Custom Order-Tracking System. I want to thank you for providing myself the opportunity to ready your company's Economical Feasibility Research worksheets. I use compiled the info that you provided into many useful and straightforward to read graphs, diagrams, and explanations. With this memorandum you will see a summary of breakeven points applying discount rates of 8, 12, 12, 13, and 16 percent, a breakeven graph comparing the web present benefit of all rewards to the net present value of all costs, as well as the internal rate of go back. I offer analysis of your couple of several scenarios, for example , a scenario summarizing the elimination of your staff position, and one other scenario outlining the elimination of a staff position plus some increased site preparation costs. You will also you should find an analysis providing a effective case, when management can easily fund two projects, to get the money of custom order monitoring system below multiple circumstances. Project feasibility based on deals of almost 8, 10, 12, 14, and 16 percent:
Breakeven graph comparing the web present benefit of all benefits to the net present value of costs (at a discount rate of 14%):
If administration stipulates the internal charge of come back must be corresponding to or more than the discount rate, the project will be justifiable in any way discount rates. At all discount rates (8, 10, 12, 14, and 16 percent), the internal rate of go back remains by 17. 05 percent. Presuming a discount charge of 16 percent, getting rid of an additional personnel position of $32, five-hundred drastically influences the monetary feasibility analysis. First, the breakeven time drops from 4. fifty four years to just 3. 31 years. Next, it would increase the internal level of return from seventeen. 05 percent to 28. 72 percent. General NPV leaps from $27, 534 to $139, 109. 52 Assuming a discount rate of...