Two machines are being evaluated for possible acquisition by the Brumfeld Corporation. Forecasts relating to the two

Question:

Two machines are being evaluated for possible acquisition by the Brumfeld Corporation. Forecasts relating to the two machines are:

Required:
For each equipment alternative, compute the following:
(1) The payback period
(2) The accounting rate of return on the original investment, rounded to the nearest tenth of a percent
(3) The accounting rate of return on the average investment, rounded to the nearest tenth of a percent
(4) The net present value and the net present value index, rounded to three decimal places, using an assumed 15% cost of capital
(5) The internal rate of return

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...