One of your company's managers says that a $120,000 piece of machinery will be paid off in 12 months because it will increase your cash flows by $10,000/month. Is this accurate? How far off (in dollars and as a percent) would this be if your company's weighted average cost of capital is 15% ? Should this person be fired?

One of your company's managers says that a $120,000 piece of machinery will be paid off in 12 months because it will increase your cash flows by $10,000/month. Is this accurate? How far off (in dollars and as a percent) would this be if your company's weighted average cost of capital is 15% ? Should this person be fired?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 10P

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