Grottos is considering purchasing a new pizza oven and the choices are: Middleby Marshall vs Blodgett. The following are the costs and incremental cash flows from each in 3 years: Show your detailed work.

Years Middleby Marshall Blodgett

0 -$15,000 -$19,000

1 $10,400 $12,700

2 $ 5,900 $ 6,100

3 $ 2,100 $ 5,300

a) If the companys required payback is 2 years, which of these two ovens should be

accepted?

b) Grottos cost of capital is 15%. Based on NPV which oven should be bought?

8. Grotto's is considering purchasing a new pizza oven and the choices are: Middleby Marshall vs Blodgett. The following are the costs and incremental cash flows from each in 3 years: 10pts Years Middleby Marshall Blodgett 0 -$15,000 -$19,000 1 $10,400 $12,700 2 $ 5,900 $ 6,100 3 $ 2,100 $ 5,300 a) If the company's required payback is 2 years, which of these two ovens should be accepted? b) Grotto's cost of capital is 15%. Based on NPV which oven should be bought