The management of Blade Industries has to choose between two machines, namely machine Dune and machine...
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The management of Blade Industries has to choose between two machines, namely machine Dune and machine Tune. The following information is presented to you: Initial investments Scrap value Net cash inflows Year 1 2 3 4 5 Machine Dune R200 000 0 R 60 000 60 000 60 000 60 000 60 000 Machine Tune R240 000 0 R 90 000 60 000 60 000 70 000 40 000 The required return is 15%. The straight line method of depreciation is in use. Required: Study the information given above and answer the following questions: Calculate the payback period for Machine Tune (year, months and days). Calculate the Net Present Value (NPV) for each machine. (round of amounts to the nearest Rand) Advise management based on your answer in 3.1.2 above. Identify and describe four (4) users of financial statements. Outline three (3) disadvantages of the payback period method Outline two (2) advantages of the Net Present Value (NPV) method. The management of Blade Industries has to choose between two machines, namely machine Dune and machine Tune. The following information is presented to you: Initial investments Scrap value Net cash inflows Year 1 2 3 4 5 Machine Dune R200 000 0 R 60 000 60 000 60 000 60 000 60 000 Machine Tune R240 000 0 R 90 000 60 000 60 000 70 000 40 000 The required return is 15%. The straight line method of depreciation is in use. Required: Study the information given above and answer the following questions: Calculate the payback period for Machine Tune (year, months and days). Calculate the Net Present Value (NPV) for each machine. (round of amounts to the nearest Rand) Advise management based on your answer in 3.1.2 above. Identify and describe four (4) users of financial statements. Outline three (3) disadvantages of the payback period method Outline two (2) advantages of the Net Present Value (NPV) method.
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To calculate the payback period for Machine Tune we need to determine the time it takes for the cumulative cash inflows to equal or exceed the initial investment Machine Tune Initial Investment R24000... View the full answer
Related Book For
Digital Systems Design Using Verilog
ISBN: 978-1285051079
1st edition
Authors: Charles Roth, Lizy K. John, Byeong Kil Lee
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