Question 5 A company is considering two alternative investments in a machine as...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Question 5
A company is considering two alternative investments in a machine as part of a workshop upgrade. Partial results of some financial analysis are as follows:
ARR Payback Period NPV @ 6% IRR pa
Machine A 45% 2.5 years $21,666 32%
Machine B 61% 52%
Machine B will cost $16,000 and have estimated annual incremental cash flows of $10,000 for the next 3 years AND an estimated salvage value of $8,000 at the end of the 3 year period.
Question: Calculate the Payback Period (PBP) for Machine B assuming cash flows are received evenly throughout the year. Calculate the NPV for Machine B if the cost of capital is 6% pa and assuming cash flows are received at the end of each year. Explain which machine you would recommend based on all of the information.
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.