What will be the impact on cash flow and profit of buying,

with a loan (L$), a piece of equipment with cost (C$)

which will reduce direct costs (COGS) by ▲X%?

Previous period total sales:

% Sales

Previous period Direct Job Costs (Cost of Goods Sold):

Previous period Fixed Costs (Operating and Overhead):

Previous period Break-even Sales:

Previous period labor as % of direct job costs:

Previous period materials as % of direct job costs:

Acquisition Cost of equipment:

Amount borrowed (L$):

Amount self-funded:

Annual loan interest rate:

Loan Period (in months):

Monthly Payment:

Annual Payment:

Average annual interest cost of loan:

Expected Annual Maintenance Cost:

Reduction in direct labor costs (COGS) (▲XL%):

Reduction in direct materials costs (COGS) (▲XM%):

Reduction in direct costs (COGS):

Annual cash flow effect of taking loan:

Payback period in years:

Annualized return on investment (ROI):

This analysis looks at the overall effect of automation on the profitability of the business. A positive cash flow would indicate that the investment should be made. Be very honest with the expected "Reduction in direct costs (COGS) %" you expect, and don't forget to enter the maintenance costs.