Payback comparisons Nova Products has a 4-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose between two alternatives. The first machine requires an initial investment of $26,000 and generates annual after-tax cash inflows of $6,000 for each of the next 11 years. The second machine requires an initial investment of $11,000 and provides an annual cash inflow after taxes of $3,000 for 30 years. a. Determine the payback period for each machine. b. Comment on the acceptability of the machines, assuming that they are independent projects. c. Which machine should the firm accept? Why? d. Do the machines in this problem illustrate any of the weaknesses of using payback? a. The payback period for the first machine is years. (Round to two decimal places.) The payback period for the second machine is years. (Round to two decimal places.) b. Is the first machine acceptable? (Select the best answer below.) Yes Click to select your answer(s). Payback comparisons Nova Products has a 4-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose between two alternatives. The first machine requires an initial investment of $26,000 antenerates annual after tax cash inflows of $6,000 for each of the next 11 years. The second machine requires an initial investment of $11.000 and provides an annual cash inflow after taxes of $3,000 for 30 years a. Determine the payback period for each machine. b. Comment on the acceptability of the machines, assuming that they are independent projects c. Which machine should the firm accept? Why? d. Do the machines in this problem ilustrate any of the weaknesses of using payback? is the second machine acceptable? (Select the best answer below.) O No Yes C. Based on their payback periods, which machine should the firm accept? (Select the best answer below) O A. Machine 1 OB. Neither OC. Machine 2 Click to select your answer(s). Payback comparisons Nova Products has a 4-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose betwee alternatives. The first machine requires an initial investment of $26,000 and generates annual after-tax cash inflows of $6,000 for each of the next 11 years. The second mac requires an initial investment of $11,000 and provides an annual cash inflow after taxes of $3,000 for 30 years a. Determine the payback period for each machine b. Comment on the acceptabiity of the machines, assuming that they are independent projects c. Which machine should the firm accept? Why? d. Do the machines in this problem illustrate any of the weaknesses of using payback? d. Do the machines in this problem illustrate any of the weaknesses of using payback? (Select the best answer below.) O A. Machine 2 has returns that last 30 years while Machine 1 has only 11 years of returns. Payback cannot consider this difference, it ignores al cash inflows beyond the payback period OB. Machine 2 has returns that last only 11 years while Machine 1 has 30 years of returns. Payback cannot consider this difference, it ignores all cash inflows beyond the payback period OC Machine 2 has returns that last 30 years while Machine 1 has only 11 years of retums. Payback considers only the first 11 years for each machine OD. Machine 2 has returns that last 30 years while Machine 1 has only 11 years of returns. Payback considers this difference it includes all cash inflows beyond the paya period