Question
The Max Aussie Ltd. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net
The Max Aussie Ltd. is considering the purchase of a new machine that would increase the speed of bottling and save money. The net cost of this machine is $250,000. The machine is expected to last 5 years and will be depreciated to zero by year 5 using the straight-line method. The company's required rate of return is 10 per cent and the expected payback period is 2.5years. The annual cash flows have the following projections. Year Cash Flow 1............. $70,000 2............. 80,000 3............. 90,000 4............. 80,000 5............. 20,000 Required: (a) Calculate the payback period of the purchase of the new machine
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