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?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter1: Introduction To Cost Management

Section: Chapter Questions

Problem 4E: Consider the following thoughts of a manager at the end of the companys third quarter: If I can...

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