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A company is considering two alternative machines with different net cash flows and salvage values. Present value amounts are calculated using Excel and the


 

A company is considering two alternative machines with different net cash flows and salvage values. Present value amounts are calculated using Excel and the results follow. Potential Machine Investments A B Present value of net cash flows (excluding initial investment and salvage) Present value of net cash flow from salvage value $ 20,902 3,100 $ 21,800 Initial investment (21,000) 652 (21,000) a. Compute the net present value of each machine A and B. b. If the company can choose only one machine, which will it choose on the basis of net present value?

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