Which instrument has a better investment and payback periods?

You are to planning to buy new equipment, after consultation with your financial officer and purchasing department. Two offers were received from vendors. Instrument A costs $25,000 and provides $5000 per year for 6 years.

Instrument B costs $8000 and generates revenue of $4000 per year for 2 years.

Which instrument has a better investment and payback periods?

Discuss the strengths and weaknesses of this decision.

 

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