For our hypothetical manufacturing company for candles we're given this:
Chapter 14:Capital Budgeting Decisions (5 pts)
1. You need to buy a piece of equipment so you need to determine your criteria: ( 2pts)
A. desired rate of return (Cost of Capital Calculation)
B. internal rate of return
C. payback period (show your numbers in detail)
2. You must decide between machine A and machine B ( make up some numbers). ( 3 pts)
Evaluate these two options using
a) Simple (Annual) rate of return
b) Pay back period
c) Present value
Which one would you choose and why?
We're confused how we're supposed to come up with these numbers, please help.
Chapter 14:Capital Budgeting Decisions (5 pts)
1. You need to buy a piece of equipment so you need to determine your criteria: ( 2pts)
A. desired rate of return (Cost of Capital Calculation)
B. internal rate of return
C. payback period (show your numbers in detail)
2. You must decide between machine A and machine B ( make up some numbers). ( 3 pts)
Evaluate these two options using
a) Simple (Annual) rate of return
b) Pay back period
c) Present value
Which one would you choose and why?
We're confused how we're supposed to come up with these numbers, please help.