The plant manager of Shenzhen Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $1,400,000. The manager believes that the new investment...

The plant manager of Shenzhen Electronics Company is considering the purchase of new automated assembly equipment. The new equipment will cost $1,400,000. The manager believes that the new investment will result in direct labor savings of $350,000 per year for 10 years.

a. What is the payback period on this project?

b. What is the net present value, assuming a 10% rate of return? Use the present value of an annuity of $1 table in Exhibit 5.

c. What else should the manager consider in the analysis?