Problem 1

 

Required: In the space below, describe the net present value method of capital budgeting.

 

 

(10 points)

 

Problem 2

 

"Required: Compute the average annual cash inflows. (20 points)

Compute the payback period using the accumulation method. (20 points)"

(40 points total)

 

20132014201520162017

Incremental revenue 6,000 2,000 4,000 2,000 1,000 

Cost of new machine 12,000

 

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