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Evans industries wishes to select the best of three possible machines each of which is expected to satisfy the firms ongoing need for additional aluminum
Evans industries wishes to select the best of three possible machines each of which is expected to satisfy the firms ongoing need for additional aluminum extrusion capacity the three machines A B & C are equally risky the firm plans to use a cost of capital of 11.1% to value each of them. the initial investment in annual cash flows over the life of each machine are shown in the following table.
Machine C $101,400 Initial investment (CF) Year (t) 1 2 3 4 5 6 Machine A Machine B $92,900 $64,500 Cash inflows (CF) $11,300 $9,400 11,300 19,800 11,300 30,500 11,300 39,600 11,300 11,300 $30,400 30,400 30,400 30,400 30,400 - a. Calculate the NPV for each machine over its life. Rank the machines in descending order or LAIN a. The net present value for machine A is $ (Round to the nearest cent.) 30,400 6 11,300 11,300 a. Calculate the NPV for each machine over its life, Rank the machines in descending order on the basis of NPV. b. Use the annualized net present value (ANPV) approach to evaluate and rank the machines in descending order on the basis of ANPV. c. Compare and contrast your findings in parts (a) and (b). Which machine would you recommend that the firm acquire? a. The net present value for machine Ais $1. (Round to the nearest cent.) Need help with question A B and C.
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