Question
The Horne Robinson Inc. has the following investment opportunities. Assume the discount rate the firm uses is 10%: Year Machine A ($20,000) Machine B ($30,000)
The Horne Robinson Inc. has the following investment opportunities. Assume the discount rate the firm uses is 10%:
| Year | Machine A ($20,000) | Machine B ($30,000) | Machine C ($40,000) |
| Inflows | Inflows | Inflows | |
| 1 | $10,000 | $12,000 | $0 |
| 2 | 10,000 | 12,000 | 10,000 |
| 3 | 5,000 | 10,500 | 30,000 |
| 4 | 2,000 | 10,500 | 15,000 |
| 5 | 0 | 0 | 15,000 |
Under the payback period and assuming these machines are mutually exclusive, which machine(s) would Horne Robinson Inc. choose?
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Finance For Beginners
Authors: Shlomo Simanovsky
1st Edition
1936703009
