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about accounting Canine Ltd wants to buy a new dog food mixing machine to make production more efficient and is considering ONE of TWO machines.
about accounting
Canine Ltd wants to buy a new dog food mixing machine to make production more efficient and is considering ONE of TWO machines. Machine A has a scrap value of 8,000 and costs 50,000. The company's cost of capital is 8%. The net cash flows for Machine A are as follows: Machine A Net Cash flows: Year 1 Year 2 Year 3 15,000 20,000 26,000 9 marks 4a) Complete the table below for Machine A (show your workings). The calculations for Machine B have been done for you. Machine A Investment Scrap Value Payback Period Net Present Value Machine B 35,000 8,000 2 year and 7 months 7,759 Calculations: 4b) Which machine (A or B) should Canine Ltd buy? Give your reasons Machine : Reasons: (type in this box) 4c) Discuss ONE non-financial (qualitative) factor that should be considered before purchasing a machine 1. (type in this box)Step by Step Solution
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