Answered step by step
Verified Expert Solution
Question
1 Approved Answer
8 The Pantry Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering
8 The Pantry Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision: Soda Snack Machines Machines Investment $73,000 $35,000 Useful life (years) 5 Estimated annual net cash inflows for useful life $20,000 $18,000 Residual value $10,000 $6,000 Depreciation method Straight-line Straight-line Required rate of return Using the net present value model, which alternative should Pantry Vending Machine Company select? mcline the inne ... the menntunun nesta A. The soda machines should be selected B. The snack machines should be selected. C. Both investments should be selected D. Neither investment should be selected. 8% 14% Soda Snack Machines Machines Investment $73,000 $35,000 Useful life (years) 5 8 Estimated annual net cash inflows for useful life $20,000 $18,000 Residual value $10,000 $6,000 Depreciation method Straight-line Straight-line Required rate of return 8% 14% Using the net present value model, which alternative should Pantry Vending Machine Company select? Click the icon to view the present value of $1 table.) Click the icon to view the present value of annuity of $1 table.) A. The soda machines should be selected. B. The snack machines should be selected. C. Both investments should be selected. D. Neither investment should be selected Data Table Present Value of $1 Periods 4 5 6 7 8 9 10 11 12 6% 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 8% 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 10% 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 12% 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 14% 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 Print Done Data Table Present Value of Annuity of $1 Periods 6% 4 3.465 5 4.212 6 4.917 7 5.582 8 6.210 9 6.802 10 7.360 11 7.887 12 8.384 8% 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 10% 3.170 3.791 4.355 4.868 5.335 5.759 6.145 6.495 6.814 12% 3.037 3.605 4.111 4.564 4.968 5.328 5.650 5.938 6.194 14% 2.914 3.433 3.889 4.288 4.639 4.946 5.216 5.553 5.660 Print Done
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started