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The management of Darwin Company are deciding between purchasing Machine A or B to improve their production capacity and efficiency. Machine Alpha Beta Initial cost
The management of Darwin Company are deciding between purchasing Machine A or B to improve their production capacity and efficiency.
Machine | Alpha | Beta |
Initial cost | $200,000 | $230,000 |
Expected life | 5 years | 5 years |
Scrap value expected | $10,000 | $15,000 |
Expected cash inflows | $ | $ |
End year 1 | 80,000 | 100,000 |
2 | 70,000 | 70,000 |
3 | 65,000 | 50,000 |
4 | 60,000 | 50,000 |
5 | 55,000 | 50,000 |
The first 4 questions have been answered here https://che.gg/32JG8rK
I need answers for these last two subquestions.
e) Explain the strengths and limitations of each investment appraisal method used in (a) to (c). f) Critically evaluate the key benefits and limitations of using budgets as a tool for strategic planning.
Thanks!
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