Selling 8th Edition by Stephen Castleberry,John Tanner

Exercise 12

Assume that you are selling a new video security system to a manufacturing plant in your town. The system will cost $275,000. It is estimated that the new system will reduce theft and pilferage. You expect losses due to theft to drop by $19,500 each year over the next 10 years. At the manufacturing plant's cost of capital, the discounted cash inflows have a value today of $350,000. Use this information to calculate the following:
a. Return on investment.
b. Payback period.
c. Net present value.