The managerial accountant at Reverse Manufacturing needs to evaluate two machines and use the payback period.The cash inflows per year are $120,000.

Required
Use the payback Method to compute the useful life for Machine 1 and Machine 2.What is the problem with the payback period method if the cutoff point is 3 years? Show all work.

Question

The managerial accountant at Reverse Manufacturing needs to evaluate two machines and use the payback period.The cash inflows per year are $120,000.
  
Required
Use the payback Method to compute the useful life for Machine 1 and Machine 2.What is the problem with the payback period method if the cutoff point is 3 years? Show all work.

Quizplus · Accepted Answer

The Answer of The managerial accountant at Reverse Manufacturing needs to evaluate two machines and use the payback period.The cash inflows per year are $120,000.
  
Required
Use the payback Method to compute the useful life for Machine 1 and Machine 2.What is the problem with the payback period method if the cutoff point is 3 years? Show all work.

The Managerial Accountant at Reverse Manufacturing Needs to Evaluate Two