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Cathy, the owner of Happy Dessert, has an opportunity to buy an ice-cream machine or an espresso machine for her company. The useful life of
Cathy, the owner of Happy Dessert, has an opportunity to buy an ice-cream machine or an espresso machine for her company. The useful life of both machines will be five years. She has prepared a forecast the cost and revenue estimate for each machine as follow: Ice-Cream Machine. Espresso Machine. Initial Investment Cost of equipment 180,000. 390,000 (Zero salvage value) Annual Revenue And costs Sales Revenue 260,000. 360,000 Variable Expense 124,000. 174,000 Fixed out of pocket Operating cost. 71000 50000 The discount rate is 19% Question Payback period for ice-cream machine Payback period for Expresso machine Net present value for ice-cream machine Net present value for Expresso machine
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