Discover Inc. wants to change their equipment to buy a more energy efficient one. They have two machines that they can choose one from, Machine A and Machine B. For both, you have to scrap them after their lifespan is over.

Machine A: Upfront cost = 50,000, annual net cash flow = 14,000, lifespan = 7 years, scrap value = 0. Machine B: Upfront cost = 50,000, annual net cash flow = 20,000, lifespan = 4 years, scrap value = 5,000.

Cost of Capital is 10%.

Which Machine should they buy if it is just a one-time initiative?

Which Machine should they buy if it is a recurring situation?

What is the NPV of Machine A

What is the NPV of Machine B