Question

Asked Nov 9, 2019

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Camber Corporation has to decide if they can finance purchasing 10 new machines for all their manufacturing sites. The machines cost $1.73 million each, and the supplier agreed to the following payment terms, 40% upfront, and the remainder to be paid over 4 years at an annual rate of 12%.

- Executives at Camber Corporation review their budgets and discover that they can pay the supplier 40% now, but their budget will only allow them to pay $4,000,000 per year for the next four years. Will that be enough to make the purchase?
- Critically discuss the effect of increasing the amount paid upfront when corporations make capital purchases, focusing on the benefits and drawbacks

Step 1

**Part 1:**

We need to determine if the company will will have sufficient amount fund to pay the loans for purchasing the assets.

Step 2

Total purchase amount for 10 new machines with a cost of 1.73 million each is $17,300,000

Using excel we can determine whether the company will have sufficient amount fund to pay the loans for purchasing the assets.

Step 3

Total amount to be paid in year 4 is $1215818.96, however amount the company h...

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