Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
ANALYSIS OF ASPEN MOLD-MAKER MACHINE
TODD R. DAVIS
Lenz-Simon Castings Corporation is facing a managerial decision on whether to purchase
the new Aspen Automated Mold-Maker Machine or to continue with production with the
current six semi-automated machines. After review of the market conditions , the 3%
inflation rate, the incremental cash flows are recorded in the report and calculates the NPV
for both alternatives. It was determined that if LSC purchases the new machine, cost will
be significantly less. NPV was calculated on the basis of the higher of the negative values
and when computing the NPV it was determined that if production is continued with the
six machines on hand the NPV will be $ (30,040,987.69), if the new machinery is
purchased a NPV of $ (1,520,251.58). The latter proves to be more in the favor of LSC at
this time. It would be in the manager’s and shareholders best interest to buy the new
machinery and cut the operating cost that LSC is currently enduring.
