Question
Lavender Plantations Pty Ltd is contemplating acquiring a new machine to be used for a relatively short period until its new factory is built
Lavender Plantations Pty Ltd is contemplating acquiring a new machine to be used for a relatively short period until its new factory is built with computerised equipment installed. Two machines are being investigated. Machine A B $ $ Cost 256,000 328,000 Cost savings-year 1 95,000 131,000 Cost savings-year 2 89,000 115,000 Cost savings-year 3 97,000 122,000 Salvage value-end of year 3 16,000 99,000 Important: For all amounts, please round off to 2 decimal places (e.g. 2.477 should be written as 2.48). Required: What are the payback periods for each of the machines in the Lavender Plantations? Payback period for Machine A = years Payback period for Machine B = years
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