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 NPV and 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?