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Arr Payback Practice

GM is a private limited company that operates a manufacturing facility on the International Space Station. It manufactures parts for NASA using 3D printing. GM plans to expand its capacity to make larger items like satellites. The new facility will cost $40 million and is expected to generate profits shown in Table 1. After 4 years, the US government will purchase the facility for $2.5 million.

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Pablo Solana Gutierrez
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940 views2 pages

Arr Payback Practice

GM is a private limited company that operates a manufacturing facility on the International Space Station. It manufactures parts for NASA using 3D printing. GM plans to expand its capacity to make larger items like satellites. The new facility will cost $40 million and is expected to generate profits shown in Table 1. After 4 years, the US government will purchase the facility for $2.5 million.

Uploaded by

Pablo Solana Gutierrez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ARR [10 marks]

Galileo Manufacturing Ltd. (GM)


Galileo Manufacturing Ltd. (GM ) is a private limited company that operates a
manufacturing facility on the International Space Station. Using a three-
dimensional (3D) printer, GM manufactures parts and tools for use by the National
Aeronautics and Space Administration (NASA) of the United States (US)
government. NASA is GM’s sole customer. Soon, GM will expand its manufacturing
capacity to make large items, such as satellites, that NASA can then put into orbit.
A new manufacturing facility with increased capacity will cost $40 million.
Expected profit from the new manufacturing facility is given in Table 1 below.
Table 1: Expected profit from GM’s new manufacturing facility

The US government has contracted to purchase the manufacturing facility from


GM at the end of four years for $2.5 million.

1a. State two advantages of a private limited company. [2 marks]

1b. For the new manufacturing facility: calculate the payback period (show [2 marks]
all your working).
1c. For the new manufacturing facility: calculate the average rate of return [2 marks]
(ARR) (show all your working).

1d. For the new manufacturing facility: comment on your answer from [2 marks]
either b(i) or b(ii).

1e. Explain one reason for GM manufacturing on the International Space [2 marks]
Station.

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