Question
Aliara Corporation is considering purchasing one of two new machines. Estimates for each machine are as follows: Machine A Machine B Investment $109,000 $154,900 Estimated
Aliara Corporation is considering purchasing one of two new machines. Estimates for each machine are as follows:
| Machine A | Machine B | ||||||
| Investment | $109,000 | $154,900 | |||||
| Estimated life | 9 years | 9 years | |||||
| Estimated annual cash inflows | $26,600 | $39,700 | |||||
| Estimated annual cash outflows | $6,400 | $9,800 | |||||
Salvage value for each machine is estimated to be zero. Click here to view PV table. Calculate the net present value of each project assuming a 5% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124. Round present value answer to 0 decimal places, e.g. 125.)
| Net Present Value | ||
| Machine A | $ | |
| Machine B | $ |
Which project should the company choose?
Machine AMachine B
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