Question
GreenEnergy Co. is considering three solar panel machines for purchase. The details are as follows. Assume a tax rate of 28% and an interest on
- GreenEnergy Co. is considering three solar panel machines for purchase. The details are as follows. Assume a tax rate of 28% and an interest on capital of 12%.
Particulars | Machine Sun (₹) | Machine Star (₹) | Machine Moon (₹) |
Initial investment | 3,50,000 | 3,00,000 | 4,50,000 |
Estimated annual sales | 5,50,000 | 5,00,000 | 6,00,000 |
Cost of production: | |||
Direct material | 50,000 | 40,000 | 60,000 |
Direct labour | 60,000 | 50,000 | 70,000 |
Factory overhead | 70,000 | 60,000 | 80,000 |
Administration cost | 35,000 | 25,000 | 45,000 |
Selling & Distribution cost | 20,000 | 15,000 | 25,000 |
- The economic life of machine Sun is 3 years, while it is 2 years for the other two. The scrap values are ₹45,000, ₹35,000, and ₹25,000 respectively. Use the payback period method to find the best investment.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Using Financial Accounting Information The Alternative to Debits and Credits
Authors: Gary A. Porter, Curtis L. Norton
9th edition
978-1285183244, 128518324X, 978-1285779263, 1285779266, 978-1285183237
