A business needs a new machine and has to make the choice between machine A and machine B. The initial cost and the net cash flow over five to the business have been calculated for each machine as follows: Cash inflows for Machines A and B Machine A Machine B Initial Investment 20,000 28,000 Net cash flow 1 8000 10,000 2 12000 12,000 12,000 3 9000 7000 9,000 6000 9,000 To finance the project, the business can borrow money at 10% per annum. 5 3 2 4 1 Year 0.621 0.683 0.751 0.826 Present value of 0.909 10% BRE II 2 12000 12,000 B 9000 12,000 4 7000 9,000 5 6000 9,000 To finance the project, the business can borrow money at 10% per annum Year 1 2 3 4 5 Present value of 0.909 0.826 0.751 0.751 0.683 0.621 10% 1. What is the Net present value of Machine A? 4913 -12450 12450 -4913 2. What is the Net Present Value of Machine B? To finance the project the business can borrow money at 10% per Year 1 2 B Present value of 0.909 0.826 0.751 0.683 10% . 1. What is the Net present value of Machine A? 2. What is the Net Present Value of Machine B? - 11750 11750 7094 -4913 3. What is the investment decision Under Net present value method? EPIC A Present value of 0.909 10.826 0.751 0.683 10 1. What is the Net present value of Machine A? 2. What is the Net Present Value of Machine B? Accept both Machine Accept the Machine B Accept the Machine A Reject both Machine 3. What is the investment decision Under Net present value method? EPIC