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A. Payback B. Discounted Payback Period C. Net Present Value D. MIRR E. Which machine would you… 1 answer below » A. Payback B. Discounted Payback Period C. Net Present Value D. MIRR E. Which machine would you advise him to buy and why? Document Preview: 3.Rank Builders is considering the replacement of its existing machine, which is obsolete, with either of the following two alternatives:
(i) Machine A which is similar to the existing one or
(ii) Machine B which is more expensive and has much greater capacity.
The cash flow at the present level of operations under the two alternatives are as View complete question » A. Payback B. Discounted Payback Period C. Net Present Value D. MIRR E. Which machine would you advise him to buy and why? Document Preview: 3.Rank Builders is considering the replacement of its existing machine, which is obsolete, with either of the following two alternatives:
(i) Machine A which is similar to the existing one or
(ii) Machine B which is more expensive and has much greater capacity.
The cash flow at the present level of operations under the two alternatives are as follows:
Cash Flows
0
1
2
3
4
5
Machine A
(525,000)
45,000
105,000
355,000
295,000
210,000
Machine B
(840,000)
210,000
295,000
355,000
375,000
300,000
Rank’s cost of capital is 10%. Help the owner evaluate the alternative machines by calculating the following:
Payback
Discounted Payback Period
Net Present Value
MIRR
Which machine would you advise him to buy and why? Attachments: Question.docx View less » Feb 04 2016 11:04 PM
