THE CNC MACHINE DECISION
When the CNC machine broke down, it was a wake-up call for French. The production line was dependent on both CNC machines working full time—if they slowed down or needed repair, the business suffered. French believed the key to relieving this bottleneck would be increasing capacity. It not only would prevent downtime but also would allow the company to take on new business. If capacity increased, French estimated that sales revenues would rise by at least $50,000 per month due to unmet demand and increased efficiency. The companyâ€s margins on the additional revenues were expected to be 35%. French saw two viable options to increase capacity: 1. Purchase an additional CNC machine for cash, or 2. Finance the purchase of an additional CNC machine 1 French considered the details of each option, keeping in mind that for long-term projects he would use a discount rate of 7%.

OPTION 1: PURCHASE A NEW CNC MACHINE WITH CASH Although it would be costly, the idea of adding a third CNC machine appealed to French. It would provide him peace of mind that if there were a breakdown, jobs would continue on schedule. Frenchâ€s preliminary research revealed that the cost of the new equipment would be $142,000. He also estimated that there would be increased out-ofpocket operating costs of $10,000 per month if a new machine were brought online. After five years, the machine would have a salvage value of $40,000. Although Peregrine did not have the cash readily available to make the purchase, French believed that with a small amount of cash budgeting and planning, this option would be feasible.

OPTION 2: FINANCE THE PURCHASE OF A NEW CNC MACHINE The company selling the CNC machine also offered a leasing option. The terms of the lease included a down payment of $50,000 and monthly payments of $2,200 for five years. After five years, the equipment could be purchased for $1. The operating costs and salvage values would be the same as option 1, the purchasing option. The company had the necessary cash on hand to make the down payment for the lease. With both the leasing and purchasing options, the company had sufficient space to operate the new equipment, and French believed he had almost all of the right employees in place to execute this plan.

 

Do you need a similar assignment done for you from scratch? We have qualified writers to help you. We assure you an A+ quality paper that is free from plagiarism. Order now for an Amazing Discount!
Use Discount Code “Newclient” for a 15% Discount!

NB: We do not resell papers. Upon ordering, we do an original paper exclusively for you.

The post purchase or finance a purchase appeared first on Essay Writers.

Between his responsibilities at his new job and trips to his old company, Adam Burke, former president of PBM Plastics, was scrambling. Only four months after selling his disposable preformed baby bottle liner business in August 2005, the buyers were unable to meet orders. Ordinarily, that might not be a former owner’s problem—but his current company, PBM Products, had a supplier exclusivity contract with his former firm, which was now part of a company called SparPack.
Within weeks, PBM Products needed to ship SparPack product to retailers or default and incur hundreds of thousands of dollars in fines—not to mention let customers down. On top of that, pulling the contract from his former company could put the SparPack division out of business and all his former employees out of work. Given the scarcity of liner suppliers, Burke was in a bind—there was no one else who could meet the obligation. Was there something he could do to get his former company back on track in time? What should he do next?

Sample Solution

The post ADAM BURKE AND PBM PLASTICS: MESSAGE IN A BOTTLE’ appeared first on nursing writers.

The post ADAM BURKE AND PBM PLASTICS: MESSAGE IN A BOTTLE’ appeared first on nursing writers.