Citrus Enterprises is upgrading its fruit washing/separating machine. Citrus Enterprises has narrowed the decision down to two machines: Machine A and Machine B. Pertinent information about each machine includes: (8 Marks) Machine A Machine B Investment $450,000 $650,000 Useful life (years) 10 10 Estimated annual net cash inflows for useful life $75,000 $120,000 Residual value $25,000 $35,000 Depreciation method straight-line straight-line Required rate of return 10% 12%

Required:

a. Calculate the net present value of Machine A.

b. Calculate the net present value of Machine B.

c. Using the net present value method, which machine should the company select if it can select only one investment?