A sugar mill has the policy that in order to decide to evaluate a new investment, it must have a payback period of no more than 6 years. The field manager is evaluating a new pesticide for pest control; For this he must make an investment in special fumigation equipment that costs Q185,000.00 and the material will cost Q 90,000 per year per farm, but he is sure that this will help him to increase the productivity of the farm's sugarcane. in Q 135,000 per year. a). Is it viable to make the investment? b). If feasible, what will be the capital recovery period: b.1) Discounted b.2) Without discounting Consider that the MARR for the mill is 17.3%

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A sugar mill has the policy that in order to decide to evaluate a new investment, it must have a payback period of no more than 6 years. The field manager is evaluating a new pesticide for pest control; For this he must make an investment in special fumigation equipment that costs Q185,000.00 and the material will cost Q 90,000 per year per farm, but he is sure that this will help him to increase the productivity of the farm's sugarcane. in Q 135,000 per year. a). Is it viable to make the investment? b). If feasible, what will be the capital recovery period: b.1) Discounted b.2) Without discounting Consider that the MARR for the mill is 17.3%
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