Question
PLEASE ANSWER ALL PARTS OF THE QUESTION IN NARRATIVE FORM (aside from data table)!! Lenox is considering the purchase of a new machine for use
PLEASE ANSWER ALL PARTS OF THE QUESTION IN NARRATIVE FORM (aside from data table)!!
Lenox is considering the purchase of a new machine for use in its operations. Machine A costs $30,000 and has cash flows of $15,000, $10,000, $5,000, and $15,000 respectively for years 1, 2, .3 and 4. Machine B costs $30,000 and has cash flows of $5,000, $10,000, $15,000, and $15,000 respectively for years 1, 2, .3 and 4. Management has concluded that since both machines have the same profitability and the same cash flow, it makes no difference which machine is purchased.
Is the payback the same on both machines? What other capital budgeting method might be more appropriate? Criticize management's comments. Use good narrative form
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