Payback comparisons Nova Products has a 5-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose between two alternatives. The first machine requires an initial investment of $42,000 and generates annual cash inflows of $8,000 for each of the next 12 years. The second machine requires an initial investment of $31,000 and provides an annual cash inflow of $6,000 for 22 years. a. Determine the payback period for each machine. b. Comment on the acceptability of the machines, assuming that they are independent projects. c. Which machine should the firm buy? Why? d. Does this problem illustrate any of the payback method's weaknesses? a. The payback period for the first machine is years. (Round to two decimal places.) The payback period for the second machine is years. (Round to two decimal places.) b. Is the first machine acceptable? (Select the best answer below.) O Yes O No Is the second machine acceptable? (Select the best answer below.) OYes O No c. Based on their payback periods, which machine should the firm accept? (Select the best answer below.) O A. Neither O B. Machine 2 O C. Machine 1 d. Does this problem illustrate any of the payback method's weaknesses? (Select the best answer below.) O A. Machine 2 has returns that last 22 years while Machine 1 has only 12 years of returns. Payback considers this difference; it includes all cash inflows beyond the payback period. O B. Machine 2 has returns that last 22 years while Machine 1 has only 12 years of returns. Payback cannot consider this difference; it ignores all cash inflows beyond the payback period. O C. Machine 2 has returns that last 22 years while Machine 1 has only 12 years of returns. Payback considers only the first 12 years for each machine. O D. Machine 2 has returns that last only 12 years while Machine 1 has 22 years of returns. Payback cannot consider this difference; it ignores all cash inflows beyond the payback period