Yoshika Landscaping is contemplating purchasing a new ditch-digging machine that promises savings of $5,600 per year for 10 years. The machine costs $21,970, and no salvage value is expected. The company's cost of capital is 12%. You have been asked to advise Yoshika relative to this capital investment decision. As part of your analysis, compute: a. As a consultant to Campus, compute: 1. The payback period. 2. The unadjusted rate of return. 3. The net present value. 4. The internal rate of return. What factors besides your quantitative analysis should be considered in making this decision? b. On the basis of these computations and any qualitative considerations, would you recommend that Campus purchase the new copier?

Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
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Yoshika Landscaping is contemplating purchasing a new ditch-digging machine that
promises savings of $5,600 per year for 10 years. The machine costs $21,970, and no
salvage value is expected. The company's cost of capital is 12%. You have been asked to
advise Yoshika relative to this capital investment decision. As part of your analysis, compute:
a. As a consultant to Campus, compute:
1. The payback period.
2. The unadjusted rate of return.
3. The net present value.
4. The internal rate of return.
What factors besides your quantitative analysis should be considered in making this decision?
b. On the basis of these computations and any qualitative considerations, would you
recommend that Campus purchase the new copier?
Transcribed Image Text:Yoshika Landscaping is contemplating purchasing a new ditch-digging machine that promises savings of $5,600 per year for 10 years. The machine costs $21,970, and no salvage value is expected. The company's cost of capital is 12%. You have been asked to advise Yoshika relative to this capital investment decision. As part of your analysis, compute: a. As a consultant to Campus, compute: 1. The payback period. 2. The unadjusted rate of return. 3. The net present value. 4. The internal rate of return. What factors besides your quantitative analysis should be considered in making this decision? b. On the basis of these computations and any qualitative considerations, would you recommend that Campus purchase the new copier?
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