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question 11 not 10
present value of lading 10. AO $-1,288 BO S-1.610 CO S-2,012 DO 42516 8 pt X Company must replace one of its current machines
Present Value of $1.00 | Period 2 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 4% 0.962 10.925 0.889 0.855 0.822 0.790
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Answer #1
Extra cost of Machine B = 73,000-52,000 = $21000
Year Incremental Cash flows Cumulative Cash flows
0 -21000 -21000
1 -1000 -22000
2 4000 -18000
3 5000 -13000
4 5000 -8000
5 3000 -5000
6 3000 -2000
7 2000 0
Hence, payback period = 7 years
i.e. F
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