Capital rationing decision (Learning Objective 4)}

Sheffield Manufacturing is considering three capital investment proposals. At this time, Sheffield Manufacturing has funds available to pursue only one of the three investments. Which investment should Sheffield Manufacturing pursue at this time? Why?

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Equipment A Equipment B Equipment C $2,200,000 Present value of net cash inflows Investment $1,695,000 ($1,500,000) NPV $ 195,000 $1,960,000 ($1,750,000) $ 210,000 ($2,000,000) $ 200,000