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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Interpretation of present value analysis and payback The CarCare  Garage is considering an investment in a new tune-up computer. The cost of the computer is
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$48,000. A cost analyst has calculated the discounted present value of the expected cash flows from the computer to be $52,650, based on the firm’s cost of capital of 12%.
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Required:
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a.      What is the expected return on investment of the machine, relative to 12%? Explain your answer.
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b.     The payback period of the investment in the machine is expected to be
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4.25 years. How much weight should this measurement carry in the decision about whether or not to invest in the machine? Explain your answer.
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