you plan to propose the purchase of a machine to the engineering manager and you expect her to ask for the payback period of thisinvestment. You also know that she generally doesn’t approveanything with a payback of over five years. The interest rate thecompany uses in these situations is 10%. The machine will cost$168,000 to purchase and will generate a revenue stream of $50k,$57k, $64k, $71k, and $78k in years 2 to 6. There will be nosalvage to this machine. Should you go ahead with this proposal? Ifso, what exactly is the payback period for this investment?
Categories: