Question

Raj Ltd. is considering the purchase of a machine. Two machines, details of which are given below, are to be considered : Particulars Life Machine A Machine B 3 years Amount (Rs.) 1,00,000 3 years Amount (Rs.) 1,00,000 Capital Cost Annual Savings (After Tax and Before Depreciation) 1st Year 2nd Year 3rd Year 80,000 60,000 40,000 20,000 70,000 1,00,000 Estimate the profitability of the two machines using : (a) Pay-back Period, (b) Return on Investment, (c) Discounted Cash Flow (Assuming Discount Rate to be 10%).​

Answer 1

Step-by-step explanation:

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