Cleveland Cove Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The company has narrowed their choices down to two: the B14 Model and the F54 Model. Financial data about the two choices follows.

	B14 Model	F54 Model
Investment	$300,000	$160,000
Useful life (years)	6	6
Estimated annual net cash inflows for useful life	$70,000	$37,000
Residual value	$30,000	$6,000
Depreciation method	Straightminus

line	Straightminus

line
Required rate of return	16%	10%

Using the net present value model, which alternative should the company select?

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(Click the icon to view the present value of $1 table.)

Present Value of $1

Periods	8%	10%	12%	14%	16%
6	0.630	0.564	0.507	0.456	0.410
7	0.583	0.513	0.452	0.400	0.354
8	0.540	0.467	0.404	0.351	0.305
9	0.500	0.424	0.361	0.308	0.263
10	0.463	0.386	0.322	0.270	0.227

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(Click the icon to view the present value of annuity of $1 table.)

Present Value of Annuity of $1

Periods	8%	10%	12%	14%	16%
6	4.623	4.355	4.111	3.889	3.685
7	5.206	4.868	4.564	4.288	4.039
8	5.747	5.335	4.968	4.639	4.344
9	6.247	5.759	5.328	4.946	4.607
10	6.710	6.145	5.650	5.216	4.833

A.

The F54 Model should be selected.

B.

Both investments should be selected.

C.

Neither investment should be selected.

D.

The B14 Model should be selected.