Q3. A company is considering purchasing a machine. Two machines A and B are available, each...

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Q3. A company is considering purchasing a machine. Two machines A and B are available, each costing Rs. 5,00,000. In comparing the profitability of machines, 10% discount rate is udes. The Earnings after tax (EAT) is expected to be: YEAR 1 2 3 4 5 Machine A 1,50,000 2,00,000 2,50,000 1,50,000 1,00,000 Machine B 50,000 1,50,000 2,00,000 3,00,000 2,00,000 Calculate Payback period of the projects. Also give your decision on selection of machines. Q3. A company is considering purchasing a machine. Two machines A and B are available, each costing Rs. 5,00,000. In comparing the profitability of machines, 10% discount rate is udes. The Earnings after tax (EAT) is expected to be: YEAR 1 2 3 4 5 Machine A 1,50,000 2,00,000 2,50,000 1,50,000 1,00,000 Machine B 50,000 1,50,000 2,00,000 3,00,000 2,00,000 Calculate Payback period of the projects. Also give your decision on selection of machines.

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To calculate the payback period for each machine we need to determine the time it takes for the init... View the full answer