Real Deal
May 3, 2008, 05:52 AM
The Dammon Corp. has the following investment opportunities
Machine A Machine B Machine C
($15,00) ($22,500) ($37,500)
inflows inflows inflows
yr 1 $6,000 yr1 $ 12,000 yr1 $0
yr2 $9,000 yr2 12,000 yr 2 30,000
yr3 $3,000 yr3 10,500 yr3 30,000
yr4 0 yr 4 10,500 yr4 15,000
yr5 0 yr 5 0 yr 5 15,000
Under the payback method and assuming these machines are mutually exclusive, which machines would Dammon Corp. choose?
DO I ADD EACH COLUMN AND DIVIDE THE TOTAL BY FIVE THEN DIVIDE THE ANSWER BY THE INVESTMENT AND THEN USE PRESENT VALUE APPENDIX
Machine A Machine B Machine C
($15,00) ($22,500) ($37,500)
inflows inflows inflows
yr 1 $6,000 yr1 $ 12,000 yr1 $0
yr2 $9,000 yr2 12,000 yr 2 30,000
yr3 $3,000 yr3 10,500 yr3 30,000
yr4 0 yr 4 10,500 yr4 15,000
yr5 0 yr 5 0 yr 5 15,000
Under the payback method and assuming these machines are mutually exclusive, which machines would Dammon Corp. choose?
DO I ADD EACH COLUMN AND DIVIDE THE TOTAL BY FIVE THEN DIVIDE THE ANSWER BY THE INVESTMENT AND THEN USE PRESENT VALUE APPENDIX