Question
A company is considering buying either Machine A or Machine B. Machine Both machines cost $45,665, but Machine A is expected to last 4 years
A company is considering buying either Machine A or Machine B. Machine Both machines cost $45,665, but Machine A is expected to last 4 years and generate cash flows of $17,859 each year, while Machine B is only expected to last 2 years, but generate cash flows of $34,777 each year. If the WACC is 10%, which machine is the best investment? Calculate the RELEVANT NPV of each investment project, then obtain the difference. That is, enter the NPV of buying Machine A - the NPV of buying Machine B. Hint: remember that the NPVs of projects of different lengths are not directly comparable...
Round to the nearest dollar (no decimals).
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