27. "Anti Golput" convection company engaged in the sale of t-shirts and screen printing, has an...
27. "Anti Golput" convection company engaged in the sale of t-shirts and screen printing,
has an investment plan to buy 20 laser screen printing machines with a total cost of
75,000. In the current conditions, the company issued a screen printing fee of 25,000 per
the year. Meanwhile, after having 20 laser screen printing machines, it is estimated the company can
save 60% of the cost of screen printing per year. Also known is the company's internal rate of return
is 15%. Determine the payback period value of this investment.
A. Less than or equal to 3.0
B. More than 3.5 and less than or equal to 4.0
C. More than 4.0 and less than or equal to 4.5
D. More than 4.5 and less than or equal to 5.0
E. More than 5.0
Homework Answers
Solution:
Initial Investment for buying 20 laser screen printing machines = $75,000
Savings in the printing fee per year = 60% of $25,000 = $15,000
Payback value of the Investment
= Initial Investment / Savings in the printing fee per year
= $75,000 / $15,000 = 5 Years
Therefore, the correct option is Option D. More than 4.5 and less than or equal to 5.0
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