The grinding machine would require an initial outlay of $100,000 and would have a useful life of 20 years. If the asset is purchased, it will reduce annual costs by $20,000 per year. The company has set a maximum required payback period on investment, of four years. Should the new machine by purchased? a) None of the responses are correct b)The new machine should be purchased based on the payback period method c)The new machine should not be purchased based on the NRV method d)The new machine should not be purchased based on the payback period method What is the correct answer?
The grinding machine would require an initial outlay of $100,000 and would have a useful life of 20 years. If the asset is purchased, it will reduce annual costs by $20,000 per year. The company has set a maximum required payback period on investment, of four years. Should the new machine by purchased? a) None of the responses are correct b)The new machine should be purchased based on the payback period method c)The new machine should not be purchased based on the NRV method d)The new machine should not be purchased based on the payback period method What is the correct answer?
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter12: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 10P: Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6...
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The grinding machine would require an initial outlay of $100,000 and would have a useful life of 20 years. If the asset is purchased, it will reduce annual costs by $20,000 per year. The company has set a maximum required payback period on investment, of four years. Should the new machine by purchased?
a) None of the responses are correct
b)The new machine should be purchased based on the payback period method
c)The new machine should not be purchased based on the NRV method
d)The new machine should not be purchased based on the payback period method
What is the correct answer?
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