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1. A company is considering whether to purchase a new machine. Machines A and B are available for RM92,000 each. Earnings after taxation are as follows: Year 1 2 3 4 5 Machine A (RM) 34,000 32,000 40,000 24,000 16,000 Machine B (RM) 18,000 24,000 32,000 48,000 32,000 By using a discount rate of 10%, you are required to evaluate the two alternatives using the following: a. Payback method, and b. Net present value method.

1. A company is considering whether to purchase a new machine. Machines A and B are available for RM92,000 each. Earnings after taxation are as follows: Year 1 2 3 4 5 Machine A (RM) 34,000 32,000 40,000 24,000 16,000 Machine B (RM) 18,000 24,000 32,000 48,000 32,000 By using a discount rate of 10%, you are required to evaluate the two alternatives using the following: a. Payback method, and b. Net present value method.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1. A company is considering whether to purchase a new machine. Machines A and B are available for RM92,000 each. Earnings after taxation are as follows: Year 1 2 3 4 5 Machine A (RM) 34,000 32,000 40,000 24,000 16,000 Machine B (RM) 18,000 24,000 32,000 48,000 32,000 By using a discount rate of 10%, you are required to evaluate the two alternatives using the following: a. Payback method, and b. Net present value method.
Transcribed Image Text:1. A company is considering whether to purchase a new machine. Machines A and B are available for RM92,000 each. Earnings after taxation are as follows: Year 1 2 3 4 5 Machine A (RM) 34,000 32,000 40,000 24,000 16,000 Machine B (RM) 18,000 24,000 32,000 48,000 32,000 By using a discount rate of 10%, you are required to evaluate the two alternatives using the following: a. Payback method, and b. Net present value method.
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