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D E F G H J M 0 Wiseman Industries has details of three machines that could fulfil the company's future production plans. Only one
D E F G H J M 0 Wiseman Industries has details of three machines that could fulfil the company's future production plans. Only one of these would be purchased. Depreciation is written off on the straight line method for all three machines. The company's cost of capital is 10%. The initial cost and cash inflows for these machines are as follows. Initial cost Net cash inflows: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Machine A -$ 50 000 Machine B -$ 50 000 Machine C -$ 50 000 $ $ 5555ASS $ 10 000 $ 10 000 $ 10 000 20 000 $ 10 000 $ 20 000 $ 20 000 $ 10 000 $ 18 000 20 000 $ 20 000 $ 3.500 $ 10 000 $ 30 000 $ 3500 $ 30 000 $ 30 000 REQUIRED Advise management which machine to purchase by using the following methods: A) Calculate the Net Present Value). B) Profitability Index Profitability Index Present Value of Net Cash Flows Question 6B Accessibility: Investigate Initial Investment -$ 49 999 $ 39 485 -$ 6293 1.5 Marks 1.5 Marks 10%
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