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(a) The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $120,000. The machine would replace an old piece of
(a) The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $120,000. The machine would replace an old piece of equipment that costs $30,000 per year to operate. The new machine would have a useful life of 10 years with no salvage value. The new machine would cost $12,000 per year to operate. The old machine currently in use could be sold now for a scrap value of $40,000. Required: Compute the SRR on the new automated bottling machine. (b) The Management of Unter Corporation is considering an investment with the following characteristics: Required: 1. Determine the pay back period of the investment 2. Would the payback period be affected if the cash inflow in the last year were several times as large
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