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Payback Method
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 |
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