12.8 COST OF CAPITAL

cost of capital is provided. it is 12.8 percent

P11-29 (similar to) Machine A $91,100 Initial investment (CF) Year (t) 1 Machine B Machine C $65,300 $101,000 Cash inflows (CF) $10,500 $30,700 19,900 30,700 30,400 30,700 40,000 30,700 30,700 2 $12,000 12,000 12,000 12,000 12,000 12,000 3 5 6 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