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
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
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
Problem 1PS
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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 are mutually exclusive, which machine(s) would Dammon Corp. choose?
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