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Case 20 Aurora Textile Company

Case 20 Aurora Textile Company. 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.

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Case 20 Aurora Textile Company

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  1. Case 20 Aurora Textile Company

  2. 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.

  3. 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?

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