Question
1. Poppy company has 50,000 baht to invest for a new machine, but there are 2 choices from 2 countries: China and New Zealand. Information
1. Poppy company has 50,000 baht to invest for a new machine, but there are 2 choices from 2 countries: China and New Zealand. Information is indicated that:
China: the cost of machine is 45,000 baht and the machine can use for 5 years. Moreover, the machine can sell 2000 baht after 5 year as a savage value. This machine can increase sales as 27,000 baht per year, and increase cost 8000 baht per year (12% as an acceptable rate of return).
New Zealand: the cost of machine is 25,000 baht and the machine also can use for 5 years. The machine can increase sales as 12000 baht per year, and increase cost 2000 baht per year (10% as an acceptable rate of return).
Taxes rate is 20% of corporate profit. If the company is considering to buy the new machine from 1 out of 2 countries, which country should company invest in? and why?
1.1 If the company uses "Payback Period"
1.2 If the company uses "Net Present Value"
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