Determine, the number of years the machine must be used to obtain payback at MARR values of, 0%, 8% and 15% per year. (b) Plot the payback years against MARR obtained in (i) and discuss the behavior.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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ISBN:9781337514835
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Chapter10: Capital Budgeting: Decision Criteria And Real Option
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 HKU purchased a face mask making machine to make face mask for the students and staffs at a price of $3.15 million. The net cash flow is estimated at $500,000 per year and a salvage value of $400,000 is anticipated regardless of when it is sold. (a) Determine, the number of years the machine must be used to obtain payback at MARR values of, 0%, 8% and 15% per year. (b) Plot the payback years against MARR obtained in (i) and discuss the behavior.

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