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i want step by step explanation as well Section- (Compulsory) (1 X 16 Marks = 16 Marks) Q12 Larry Ice Cream in the Du Pont
i want step by step explanation as well
Section- (Compulsory) (1 X 16 Marks = 16 Marks) Q12 Larry Ice Cream in the Du Pont Circle Area of Washington DC is famous for its gourmet ice cream. However, some customers have asked for a health oriented low calorie, soft yoghurt. The machine that makes this confection is manufactured in Italy and costs $5000 plus $1750 for installation. Larry estimates that the machine will generate a net cashflow of $2000 a year. Larry estimates the machine's life be 10 years and that it will have a $400 salvage value. His cost of capital is 15 percent. Should Larry purchase the machine? Apply the Capital Budgeting Techniques and suggest feasible solution for Larry (Standard Pay Back Period is 5 Years). (16 Marks) Step by Step Solution
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