1. Background • Aurora was questioning whether it should install a new ring-spinning machine, Zinser 351 ($8.25 million) whose efficiency will reduce operating costs. • But Aurora had losses last 4 years and limited cash ability and working capitals. Difficult financial environment is expected to go on in future.
2. Questions • 1) Briefly summarize Text-Mill Industry. • 2) Does Aurora have to keep using the existing ring-spinning machine or purchase the Zinser? • (Using NPVand IRR, answer this question) • 3) Is it really best interest to shareholders in the changing environment – lifting quota (WTO) and in terms of liability risks associated with customer return?