Polymold Case

Topics: Net present value, Investment, Costs Pages: 2 (467 words) Published: March 12, 2013
Andrew Corless
Finance 423
March 3, 2013
Professor Haddad
Polymold Division

In order to determine whether or not Polymold should purchase the CAD/CAM computer, the first step should be at forecasting the financial statements. This is will help in later steps by giving numbers that can help to decide whether or not to buy the CAD/CAM. Forecasts of the financial statements should be created both with the purchase of the computer and without the purchase of the computer. After creating the forecasts the main numbers that are differentiated would be mostly shown in the inventory, sales, costs of good sold, and account receivables. Another step to be done is to calculate the net present value of purchasing the computer. With the given numbers for depreciation and costs of CAD/CAM, with the positive NPV it shows as a good investment for Polymold. Although this shows for a good investment, other information factors into the purchasing of the computer. Without the purchase of CAD/CAM the percentage of market share will begin to decline as a result of the companies current trend which is a result to other companies having the more advanced and more technological abilities in creating the same products into the market place. If the company does not purchase the machine it seems as though they will not be in the market much longer at all. With the purchase of CAD/CAM the sales would begin to increase in result to Polymold having the technology to make the product more efficiently and effectively. The fixed costs of Polymold will increase by a large amount due to the new computer cost. This is a negative effect on the company but it should not be taken as too big of a threat. The biggest threat is the competitors in the industry beginning to increase their own structures and strategies in making the product at the most efficient way possible and the consumers would like to receive the best product possible. Without the CAD/CAM it leaves workers to sketch the plastic...
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