Express Corporation wants to buy a new stamping machine. The machine will provide the company with a new product line: pressed food trays for kitchens. Two machines are being considered; the data for each machine follow.

The company’s minimum rate of return is 16 percent, and the maximum allowable pay-back period is 5.0 years.

1. Compute the net present value for each machine. (Round to the nearest dollar.)
2. Compute the accounting rate of return for each machine. (Round to one decimal place.)
3. Compute the payback period for each machine. (Round to one decimal place.)
4. From the information generated in requirements 1–3, decide which machine should be purchased.Why?

  • CreatedMarch 26, 2014
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