Lavender Plantations Pty Ltd is contemplating acquiring a new machine to be used for a relatively short period until its new factory is built with computerised equipment installed. Two machines are being investigated. Machine Cost Cost savings-year 1 Cost savings-year 2 Cost savings-year 3 Salvage value-end of year 3 A $ 256,000 95,000 89,000 97,000 16,000 Payback period for Machine A = B $ 328,000 131,000 115,000 122,000 99,000 Important: • For all amounts, please round off to 2 decimal places (e.g. 2.477 should be written as 2.48). Required: What are the payback periods for each of the machines in the Lavender Plantations?
Lavender Plantations Pty Ltd is contemplating acquiring a new machine to be used for a relatively short period until its new factory is built with computerised equipment installed. Two machines are being investigated. Machine Cost Cost savings-year 1 Cost savings-year 2 Cost savings-year 3 Salvage value-end of year 3 A $ 256,000 95,000 89,000 97,000 16,000 Payback period for Machine A = B $ 328,000 131,000 115,000 122,000 99,000 Important: • For all amounts, please round off to 2 decimal places (e.g. 2.477 should be written as 2.48). Required: What are the payback periods for each of the machines in the Lavender Plantations?
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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Transcribed Image Text:Lavender Plantations Pty Ltd is contemplating acquiring a new machine to be used for a
relatively short period until its new factory is built with computerised equipment installed.
Two machines are being investigated.
Machine
Cost
Cost savings-year 1
Cost savings-year 2
Cost savings-year 3
Salvage value-end of year 3
Payback period for Machine A =
A
years
Payback period for Machine B =
$
256,000
95,000
89,000
97,000
16,000
Important:
• For all amounts, please round off to 2 decimal places (e.g. 2.477 should be written as
2.48).
years
B
Required:
What are the payback periods for each of the machines in the Lavender Plantations?
$
328,000
131,000
115,000
122,000
99,000
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