Question
The Dammon Corp. has the following investment opportunities: Machine A Machine B Machine C ($10,000 cost) ($22,500 cost) ($35,500 cost) Inflows Inflows Inflows year 1
The Dammon Corp. has the following investment opportunities:
| Machine A | Machine B | Machine C | ||||||||||
| ($10,000 cost) | ($22,500 cost) | ($35,500 cost) | ||||||||||
| Inflows | Inflows | Inflows | ||||||||||
| year 1 | $ | 6,000 | year 1 | $ | 12,000 | year 1 | $ | -0- | ||||
| year 2 | 3,000 | year 2 | 7,500 | year 2 | 30,000 | |||||||
| year 3 | 3,000 | year 3 | 1,500 | year 3 | 5,000 | |||||||
| year 4 | -0- | year 4 | 1,500 | year 4 | 20,000 | |||||||
Under the payback method and assuming these machines are mutually exclusive, which machine(s) would Dammon Corp. choose?
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
