Capital Investment Appraisal Capital Investment AppraisalAs the company's Financial Analyst, you have been tasked to attend a high-level tradeshow inColumbia. The purpose is to view and purchase two heavy duty machines to use in theproduction, bottling and packaging of the company's new line of soda pops. The projected netcashflows for two (2) machinery the company is considering investing in are as follows.Predicted Cash FlowsYearsMachine A: The Mega Star2022$USDMachine B: Turbo Mac2022$USD($25 million)($20 million)13 million2 million24 million4 million35 million4 million6 million8 million7 million6 million58 million6.11 million79 million6 million8 million7 million6 million86 million9.5 million103 millionRequiredA. Utilize capital investment appraisal techniques to determine which Machine should bepursued for the selected period based on the initial cost of $25 million and $20 millionrespectively, and a cost of capital of 10%.

Capital Investment can be decided based on Net present Value. NPV is the difference between Present…

apital Investment Appraisal s the company's Financial Analyst, you have been tasked to attend a high-level tradeshow in plumbia. The purpose is to view and purchase two heavy duty machines to use in the oduction, bottling and packaging of the company's new line of soda pops. The projected net shflows for two (2) machinery the company is considering investing in are as follows. Predicted Cash Flows ears Machine A: The Mega Star2022 Machine B: Turbo Mac2022 SUSD SUSD ($25 million) 3 million ($20 million) 2 million 4 million 4 million 5 million 4 million 6 million 8 million 7 million 6 million 8 million 11 million 9 million 8 million 7 million 6 million 6 million 5 million 6 million 3 million equired A. Utilize capital investment appraisal techniques to determine which Machine should be pursued for the selected period based on the initial cost of $25 million and $20 million respectively, and a cost of capital of 10%.

apital Investment Appraisal s the company's Financial Analyst, you have been tasked to attend a high-level tradeshow in plumbia. The purpose is to view and purchase two heavy duty machines to use in the oduction, bottling and packaging of the company's new line of soda pops. The projected net shflows for two (2) machinery the company is considering investing in are as follows. Predicted Cash Flows ears Machine A: The Mega Star2022 Machine B: Turbo Mac2022 SUSD SUSD ($25 million) 3 million ($20 million) 2 million 4 million 4 million 5 million 4 million 6 million 8 million 7 million 6 million 8 million 11 million 9 million 8 million 7 million 6 million 6 million 5 million 6 million 3 million equired A. Utilize capital investment appraisal techniques to determine which Machine should be pursued for the selected period based on the initial cost of $25 million and $20 million respectively, and a cost of capital of 10%.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 5E: Cash payback period for a service company Janes Clothing Inc. is evaluating two capital investment...

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Cash payback period for a service company Janes Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of 975,000 and each with a seven-year life and expected total net cash flows of 1,050,000. Location 1 is expected to provide equal annual net cash flows of 150,000, and Location 2 is expected to have the following unequal annual net cash flows: Determine the cash payback period for both location proposals.
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