I. Find the payback period for each machine. ii. Compute the discounted payback period.
iii. Using the payback criterion, advise the Management of the Company on which machine to purchase, giving a reason for your choice of machine.
iv. Would your advice in b(ii) change if the Company’s objective is that of profitability?
v. Determine the net present value for each machine using a discount rate of 18 percent.
vi. Using the net present value criterion, advise the Management of the Company on which machine to purchase, giving a reason for your choice of machine
vii. Account for any difference in the advice given using both the payback criterion and the net present value criterion.