The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine which one has the best cash payback. Machine A Machine B Machine C Annual cash flow$40,000 $50,000 $75,000 Average investment300,000 250,000 500,000 a.Machine Ab.Machine Cc.Machine Bd.Machines B and C have the same preferred payback period.

Payback period is the time required to recover the investment. Payback period = Initial…

Answered: The production department is proposing…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 4EA: Assume a company is going to make an investment of $450,000 in a machine and the following are the...

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The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine which one has the best cash payback.

	Machine A	Machine B	Machine C
Annual cash flow	$40,000	$50,000	$75,000
Average investment	300,000	250,000	500,000

a.Machine A

b.Machine C

c.Machine B

d.Machines B and C have the same preferred payback period.

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