8. Machines A and B are mutually exclusive and are expected to produce the following real cash...

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8. 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 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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Principles Of Corporate Finance

ISBN: 9780071314176

10th Global Edition

Authors: Richard Brealey

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