The Dammon Corp. has the following investment opportunities: Machine A Machine B Machine C ($10,000 cost) ($22,500 cost) ($35,500 cost) Inflows Inflows Inflows year 1 $ 6,000 year...

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Finance

The Dammon Corp. has the following investment opportunities:
Machine A Machine B Machine C
($10,000 cost) ($22,500 cost) ($35,500 cost)
Inflows Inflows Inflows
year 1 $ 6,000 year 1 $ 12,000 year 1 $ -0-
year 2 3,000 year 2 7,500 year 2 30,000
year 3 3,000 year 3 1,500 year 3 5,000
year 4 -0- year 4 1,500 year 4 20,000
Under the payback method and assuming these machines aremutually exclusive, which machine(s) would Dammon Corp. choose?
Multiple Choice
Machine A
Machine B
Machine C
Machine A and B

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4.0 Ratings (491 Votes)

Machine A Payback period full years until recovery unrecovered cost at the start of the yearcash See Answer

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The Dammon Corp. has the following investment opportunities:Machine AMachine BMachine C($10,000 cost)($22,500 cost)($35,500 cost)InflowsInflowsInflowsyear 1$6,000year 1$12,000year 1$-0-year 23,000year 27,500year 230,000year 33,000year 31,500year 35,000year 4-0-year 41,500year 420,000Under the payback method and assuming these machines aremutually exclusive, which machine(s) would Dammon Corp. choose?Multiple ChoiceMachine AMachine BMachine CMachine A and B

Machine A			Machine B			Machine C
($10,000 cost)			($22,500 cost)			($35,500 cost)
Inflows			Inflows			Inflows
year 1	$	6,000	year 1	$	12,000	year 1	$	-0-
year 2		3,000	year 2		7,500	year 2		30,000
year 3		3,000	year 3		1,500	year 3		5,000
year 4		-0-	year 4		1,500	year 4		20,000