J&M Manufacturing plans on purchasing a new assembly machine for $30,000 to automate one of its current manufacturing operations. It will cost an additional $5,500 to have the new machine installed. With the new machine, J&M expects to save $11,000 in annual operating and maintenance costs. The machine will last fivr years with an expected salvage value of $6,000. a. How long will it take to recover the investment (plus installation cost)? The payback period is ? years. (Round up to the nearest whole number.) b. If J&M's interest rate is known to be 13%, determine the discounted payback period. The discounted payback period is ? years. (Round up to the nearest whole number.)
J&M Manufacturing plans on purchasing a new assembly machine for $30,000 to automate one of its current manufacturing operations. It will cost an additional $5,500 to have the new machine installed. With the new machine, J&M expects to save $11,000 in annual operating and maintenance costs. The machine will last fivr years with an expected salvage value of $6,000.
a. How long will it take to recover the investment (plus installation cost)?
The payback period is ? years. (Round up to the nearest whole number.)
b. If J&M's interest rate is known to be 13%, determine the discounted payback period.
The discounted payback period is ? years. (Round up to the nearest whole number.)
Please give proper explanation of the each sub question given above.will give you thumbs up only for the correct answer. Thank you
Step by step
Solved in 3 steps
