Payback Period, Present Value and Net Present Value?

[匿名]

2008-08-10 11:46 am

A company expects to buy one machine. There are two machines each costing HKD 20,000. The net cash flows after operating cost and expenses but not allowing for depreciation are expected to be $5,300 from year 1 to 4 for Machine A and $5,000 from year 1 to 7 for Machine B.

(a)Compute the payback period for Machine A and Machine B. Which one is more preferable in terms of payback period is concerned?

(b)Given the case to decide whether to buy Machine A or Machine B as buying capital in the discounted cash flow. Compute the PV for the cash flow A and B.

(c)Compute the two NPVs for Machine A and Machine B at a discount factor of 10% and come back which machine is more favorable.

回答 (1)

用戶22404

2008-08-11 7:52 pm

✔ 最佳答案

(a) Machine A= 20000/5300=3.77years. Machine B = 20000/5000 = 4years. Machine A is more preferable to machine B. (b) Assuming discount factor of 10%, PV for cashflowA=5300/(1.1)+5300 /(1.1)^2 +5300/(1.1)^3+5300/(1.1)^4=$16,800. PV for cashflowB=5000/(1.1)+5000/(1.1)^2 + 5000/(1.1)^3 + 5000/(1.1)^4 + 5000/(1.1)^5 + 5000/(1.1)^6+5000/(1.1)^7=$24,342.10. Hence, machine B should be chosen.(c)NPV for machine A=-20000+16800=$-3200 while NPV for machine B=-20000+24342.1=4342.1, hence Machine B is more favourable than A.

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