Question
The production department is proposing the purchase of an automatic insertion machine. It has identified 3 machines and have asked the accountant to analyze them
The production department is proposing the purchase of an automatic insertion machine. It has identified 3 machines and have asked the accountant to analyze them to determine which of the proposals (if any) meet or exceed the company's policy of a minimum desired rate of return of 10% using the net present value method. Each of the assets has an estimated useful life of 10 years. The accountant has identified the following data:
Which of the investments are acceptable?
Machines B & C
Machines A & C
Machines B only
Machines A only
Present value of future cash flows computed using 10% rate of return Amount of initial investment Machine A $305,000 300,000 Machine B $295,000 300,000 Machine $300,000 300,000
Step by Step Solution
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Step: 1
Statement showing computations Particulars Machine A Machine B Machine C Present Value ...Get Instant Access to Expert-Tailored Solutions
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Step: 3
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