Question
Lila Limited is considering the purchase of a new machine for its manufacturing facilities. The purchase of the machine is expected to reduce operating costs.
Lila Limited is considering the purchase of a new machine for its manufacturing facilities. The purchase of the machine is expected to reduce operating costs.
Presented below is the relevant cost and operating information relating to the new machine:
Initial Cost | $240262 |
Installation Costs | $22052 |
Useful Life | 11 years |
Expected annual cash operating savings years 1-11 | $56092 |
Additional annual cash fixed costs | $12802 |
Assuming Lila Limited uses the payback method to evaluate capital expenditures, what is the payback period for this expenditure?
Select one:
a. 4.68 years
b. 6.06 years
c. 3.89 years
d. 5.55 years
Plato Ltd. is considering one of two different projects. Cash flow data for these projects are as follows:
| Year | Project CR | Project DR |
| 0 | ($60187) | ($92988) |
| 1 | 21594 | 16764 |
| 2 | 31834 | 40283 |
| 3 | 4864 | 46958 |
| 4 | 9932 | 11000 |
Assuming the companys objective is to minimize the payback period, what is the payback period of the project that should be accepted?
Select one:
a. 2.19 years
b. 3.77 years
c. 3.19 years
d. 2.77 years
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