GreenEnergy Co. is considering three solar panel machines for purchase. The details are as follows. Assume...
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- GreenEnergy Co. is considering three solar panel machines for purchase. The details are as follows. Assume a tax rate of 28% and an interest on capital of 12%.
Particulars | Machine Sun (?) | Machine Star (?) | Machine Moon (?) |
Initial investment | 3,50,000 | 3,00,000 | 4,50,000 |
Estimated annual sales | 5,50,000 | 5,00,000 | 6,00,000 |
Cost of production: | |||
Direct material | 50,000 | 40,000 | 60,000 |
Direct labour | 60,000 | 50,000 | 70,000 |
Factory overhead | 70,000 | 60,000 | 80,000 |
Administration cost | 35,000 | 25,000 | 45,000 |
Selling & Distribution cost | 20,000 | 15,000 | 25,000 |
- The economic life of machine Sun is 3 years, while it is 2 years for the other two. The scrap values are ?45,000, ?35,000, and ?25,000 respectively. Use the payback period method to find the best investment.
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