Pressed Corporation wants to buy a new stamping machine. The machine will provide the company with a

Question:

Pressed Corporation wants to buy a new stamping machine. The machine will provide the company with a new product line: pressed rubber food trays for kitchens. Two machines are being considered; the data for each machine are as follows:

The company's minimum rate of return is 16 percent, and the maximum allowable payback period is 5.0 years.

Required
1. Compute the net present value for each machine.
2. Compute the accounting rate of return for each machine.
3. Compute the payback period for each machine.
4. From the information generated in requirements 1, 2, and 3, decide which machine should be purchased.Why?

Net Present Value
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