Question

Q-2 A company is considered the purchase of a machine, the machines A and B are
available for Rs 80,000 each. Earnings after taxation are as:
Year
Machine A
Machine B
Rs
Rs
1
2
3
24,000
32,000
40,000
24,000
16,000
8,000
24,000
32,000
48,000
32,000
4
5
Evaluate the two alternatives according to (a) Payback Method, and (b). Net Present Value
Method (A discount rate of 10% is to be used).​

Answer 1

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Problem 2. A company is considered the purchase of a machine. the machines A and B are available for $80,000 each. Earnings after taxation are as: ... 24,000 of 40,000 = 2 years and 7.2 month. Payback period: Machine A: ... 2 3/5 years. Machine B: (8,000 + 24,000 + 32,000 + 1/3 of 48,000) = 3 1/3 years.