JKL Electronics plans to purchase new machinery to increase its production output. Three options are...
90.2K
Verified Solution
Link Copied!
Question
Accounting
JKL Electronics plans to purchase new machinery to increase its production output. Three options are under review. The relevant details are given below. Assume all sales are on cash. The corporate income-tax rate is 34%. Interest on capital may be assumed to be 10%.
Particulars
Machine D(Rs)
Machine E(Rs)
Machine F(Rs)
Initial investment
3,70,000
4,00,000
4,50,000
Estimated annual sales
5,20,000
5,50,000
6,00,000
Cost of production:
Direct material
65,000
70,000
75,000
Direct labour
50,000
55,000
60,000
Factory overhead
80,000
85,000
90,000
Administration cost
18,000
20,000
22,000
Selling & Distribution cost
12,000
14,000
16,000
The economic life of Machine D is 5 years, Machine E is 4 years, and Machine F is 6 years. The scrap values are Rs.25,000, Rs.30,000, and Rs.35,000 respectively. Calculate the most profitable investment based on the payback period method.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
