The management of Maxim limited intends to replace its obsolete machine. Two machines from different manufacturers...
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The management of Maxim limited intends to replace its obsolete machine. Two machines from different manufacturers are being assessed. The machines will cost the same amount but will generate different cash flows over their useful livesof 6 years. The company's cost of capital is 12%. Year ● Initi al CO st ● 1 2 3 4 5 6 CASH FLOWS Machine A 140,000 30,000 40,000 60,000 80,000 90,000 100,000 Machine B 140,000 Required. a) Which of the two machines would be preferred if quantitative assessment isbased on 50,000 50,000 50,000 50,000 50,000 50,000 Discounted Payback period Net present value Internal rate of return b) What other qualitative information should be considered in selection of thetwo machine The management of Maxim limited intends to replace its obsolete machine. Two machines from different manufacturers are being assessed. The machines will cost the same amount but will generate different cash flows over their useful livesof 6 years. The company's cost of capital is 12%. Year ● Initi al CO st ● 1 2 3 4 5 6 CASH FLOWS Machine A 140,000 30,000 40,000 60,000 80,000 90,000 100,000 Machine B 140,000 Required. a) Which of the two machines would be preferred if quantitative assessment isbased on 50,000 50,000 50,000 50,000 50,000 50,000 Discounted Payback period Net present value Internal rate of return b) What other qualitative information should be considered in selection of thetwo machine
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Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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