An analysis of the payback period for this project shows payback in 4. The major benefit from acquiring Vulcan Mold-Maker machine is the production of higher quality products. Moreover, replacing the semi-automated machine with the Vulcan Mold-Maker offers strategic benefits in the long run as previously discussed.
The new machine will improve overall efficiency of the firm and will provide more cash inflows due to saving in salaries and other associated costs.
The higher quality products will be effective for the firm to negotiate long-term contracts with original-equipment manufacturers OEMs. This rate had not been reviewed since The beta, equity risk premium and risk free return were given in the case. The process was relatively labor intensive, required training and retraining to obtain consistency in mold quality, and demanded some heavy lifting from workers.
In addition, the payback period of the Vulcan Mold-Maker is reduced to 4. Fonderia di Torino case, business and finance homework help Anonymous timer Asked: A will be able to replace labor intensive required semi-automated machines with automated machines, thus reducing medical claims.
A is a manufacturing company who produces metal castings using six semi-automated molding machines. The Vulcan Mold-Maker would replace an older machine and also some of the work force.
The extent of any labor savings would depend on negotiations with the union. Get Full Essay Get access to this section to get all help you need with your essay and educational issues. Benefit over time The three scenarios illustrated above clearly shows that the investment in the new machine creates greater value to the company, unless there should be some unexpected turnout in sales.
Fonderia Di Cerini has several unknown variables that should be considered when making the decision of whether the new machine should be purchased.
Medical claims had recently doubled as the mix of casting products moved toward heavy items. The company grew slowly but steadily. The cash flows of years are summarized in table 1. In November of she was faced with the decision of purchasing an automated molding machine called the Vulcan Mold-Maker.
Labor costs will be reduced by almostCerini assumed that, at a high and steady rate of machine utilization, the Vulcan Mold-Maker would need to be replaced after the eighth year. This would lead to a lower rejection rate, lower scrap rates, and an increase in quality.
Then we calculated the present value of cash flows of each machine and then the annual payment in case of each machine t determine, which machine will be less costly for the firm.
In the future if the company would like to expand into other areas of manufacturing, they would have space to do so without adding additional costs to a new investment.
The semi-automated process was labor intensive for the workers. From the analysis and result, it can be concluded that Vulcan Mold-Maker Automated machine will have lower annual payments with improved business efficiency.
However, they are currently considering purchasing a Vulcan Mold-Maker machine to replace the six machines currently in place.
The company stood out because of its quality products. Unfortunately, the success of the purchase of the Vulcan Mold-Maker does rely on the success of negotiations with the labor union. Because these two alternatives have different life spans, an effective annual cost EAC analysis must be conducted to properly compare the two options.
The sand molds currently used to make castings were prepared in a semi-automated process. The cost of debt given was 6. Along with this assumption, we calculated the present value of cash outflows by discounting the cash flows from 9.
There are numerous qualitative aspects surrounding the decision whether or not to purchase the Vulcan machine. Although it is unquantifiable at this point, there should be a decrease in medical claims leading to a saving in insurance costs.
The extent of any labor savings would depend on negotiations with the union. In other words, calculate NPVs for the following scenarios:Fonderia di Torino S.p.A Please assess the economic benefits of acquiring the Vulcan Mold-Maker machine.
What is the initial outlay? What are the benefits over time? What is an appropriate discount rate? Does the net present value(NPV) warrant the i /5(2). View Notes - BMGT - Fonderia Di Torino - Individual Case from BMGT at University of Maryland. CAPM Beta % RiskFreeRate % EquityRiskPremium % WACC DebttoEquityRatio CostofEquit88%(8).
I need a case analysis done in excel as well as a word document describing the analysis of the Fonderia di Torino article attached. I need these areas: Outlook Capital Project Proposal Capital Considerations Project Analysis.
Fonderia di Torino’s specialization is the production of precision metal castings for the use in automotive, aerospace, and construction equipment.
The company stood out because of its quality products. Study Guides. Tough GCSE topics broken down and explained by out team of expert teachers FACULDADE DE ECONOMIA DA UNIVERSIDADE NOVA DE LISBOA Fonderia di Torino Spa Corporate Finance Course by Professor Qinglei Dai 4/26/ [Master in Finance] Jo o Sabino Leonardo Carvalho Luis Portugal Please.
Fonderia Di Torino S.p.A. Case Solution,Fonderia Di Torino S.p.A. Case Analysis, Fonderia Di Torino S.p.A.
Case Study Solution, Managing Director of the specialty foundry must decide whether to approve major investments to automate the production process of its plant. Case is suffic.Download