What should be management decision

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Question - Cool-Fire Company makes heat- and wear-resistant cookware. The company is expanding, and a new stamping machine is under consideration. The machine being considered can make parts that currently are being purchased from an outside supplier. The machine's cost is $1,322,500; its estimated useful life is nine (9) years and salvage value $62,500. Gross annual cash inflow from the new machine is estimated at $775,800, and annual operating expenses should be $748,500 (including $140,000 of depreciation). Management requires the payback period to be eight years or less. Using the information given and the payback period analysis procedures,

(i) Show the calculations needed to make the decision below.

(ii) What should be management's decision?

Reference no: EM133175071

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