P12-14 (similar to) Unequal livesANPV approach Evans Industries wishes to select the best of three possible...

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P12-14 (similar to) Unequal livesANPV approach Evans Industries wishes to select the best of three possible machines, each of which is expected to satisfy the firm's ongoing need for additional aluminum-extrusion capacity. The three machines-A, B, and C are equally risky. The firm plans to use a cost of capital of 11.6% to evaluate each of them. The initial investment and annual cash inflows over the life of each machine are shown in the following table. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Machine A Initial investment (CFO) Year (t) $92,400 Machine B $65,200 Machine C $99,600 Cash inflows (CF+) 1 $12,600 $9,800 $30,000 2 12,600 19,100 30,000 3 12,600 29,400 30,000 4 12,600 39,900 30,000 12,600 30,000 40 000 Initial investment (CFO) $92,400 $65,200 $99,600 Year (t) Cash inflows (CF+) $12,600 $9,800 $30,000 2 12,600 19,100 30,000 12,600 29,400 30,000 4 12,600 39,900 30,000 5 6 12,600 12,600 30,000 a. Calculate the NPV for each machine over its life. Rank the machines in descending order on the basis of NPV. b. Use the annualized net present value (ANPV) approach to evaluate and rank the machines in descending order on the basis of ANPV. c. Compare and contrast your findings in parts (a) and (b). Which machine would you recommend that the firm acquire? P12-14 (similar to) Unequal livesANPV approach Evans Industries wishes to select the best of three possible machines, each of which is expected to satisfy the firm's ongoing need for additional aluminum-extrusion capacity. The three machines-A, B, and C are equally risky. The firm plans to use a cost of capital of 11.6% to evaluate each of them. The initial investment and annual cash inflows over the life of each machine are shown in the following table. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Machine A Initial investment (CFO) Year (t) $92,400 Machine B $65,200 Machine C $99,600 Cash inflows (CF+) 1 $12,600 $9,800 $30,000 2 12,600 19,100 30,000 3 12,600 29,400 30,000 4 12,600 39,900 30,000 12,600 30,000 40 000 Initial investment (CFO) $92,400 $65,200 $99,600 Year (t) Cash inflows (CF+) $12,600 $9,800 $30,000 2 12,600 19,100 30,000 12,600 29,400 30,000 4 12,600 39,900 30,000 5 6 12,600 12,600 30,000 a. Calculate the NPV for each machine over its life. Rank the machines in descending order on the basis of NPV. b. Use the annualized net present value (ANPV) approach to evaluate and rank the machines in descending order on the basis of ANPV. c. Compare and contrast your findings in parts (a) and (b). Which machine would you recommend that the firm acquire?