Machines A and B are mutually exclusive and are expected to produce the following real cash flows:
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Machines A and B are mutually exclusive and are expected to produce the following real cash flows:
Cash Flows ($ thousands)
Machine C 0 C 1 C 2 C 3 A 100 110 121 B 120 110 121 133 Visit us at www.mhhe.com/bma 148 Part One Value The real opportunity cost of capital is 10%.
a. Calculate the NPV of each machine.
b. Calculate the equivalent annual cash flow from each machine.
c. Which machine should you buy?
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