The Whichone Company is considering a new popper for one of its portable caramel popcorn stands....
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The Whichone Company is considering a new popper for one of its portable caramel popcorn stands. The analysis is narrowed to the "Pak" or the "Boom". Information on the two devices is: PAK BOOM P60,000. 24,000 5,000 P90,000 34,000 8,000 Purchase price Annual cash inflows Salvage value in five years Useful life 5 years 5 years Other devices will do the job equally as well. Whichone uses a 16% required rate of return.. REQUIRED: a. Which machine has the higher NPV? b. Using the profitability index, which machine is more attractive? The Whichone Company is considering a new popper for one of its portable caramel popcorn stands. The analysis is narrowed to the "Pak" or the "Boom". Information on the two devices is: PAK BOOM P60,000. 24,000 5,000 P90,000 34,000 8,000 Purchase price Annual cash inflows Salvage value in five years Useful life 5 years 5 years Other devices will do the job equally as well. Whichone uses a 16% required rate of return.. REQUIRED: a. Which machine has the higher NPV? b. Using the profitability index, which machine is more attractive?
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