Investment Appraisal A bread company is looking to expand production. They can chose between one of the three following pieces of equipment: Initial Return Return Return Return Return Scrap costs Year 1 Year 2 Year 3 Year 4 Year 5 Machine A 50m 20m 20m 20m 20m 20m 10m Machine B 60m 40m 10m 10m 10m 10m 10m Machine C 100m 20m 25m 35m Som 70m 20m value Questions: 1. Calculate the total profit for each machine after 5 years (including scrap value) 2. Calculate the payback period for each machine 3. Calculate the ARR for each machine 4. Using a discounted cash flow table, calculate the profit made by each machine at the end of year 5 (including scrap value) - interest rate=6% 5. Which machine, if any would you recommend the company purchase Example II A component company has to replace an existing machine. They can chose between one of the three following options: Initial Return Return Return Return Return Scrap costs Year 1 Year 2 Year 3 Year 4 Year 5 value Replace 50m 15m 15m 20m 20m 10m machine Repair and 3m 10m 10m 10m 15m 15m upgrade machine Outsource 10m 10m 10m 12m 12m 15m 0 production to another company 25m 0 Questions: 1. Calculate the total profit for each option after 5 years (including scrap value) 2. Calculate the payback period for each option 3. Calculate the ARR for each machine 4. Using a discounted cash flow table, calculate the profit made by each machine at the end of year 5 (including scrap value) - interest rate - 6% 5. Which option you recommend the company purchase Na INVESTMENT APPRAISAL: PAYBACK DEFINITION The amount of time that were ortaya Gesider the following business decisions and determine the paytadkach 1. Awwacheter for a production proces cut $2.000 and will S25.00cher 2. A cast curs 530,000 for wtedet ons by per week wichtiyati totales de from 1. Acompresor for Anticipated 750.000 A company pre building for the 250.000 em 54.000 mily An intrerurbussamos bounce the cost of they were reach other the paperial Top 3 App