Evans Industries wishes to select the best of three possible machines, each of which is expected to satisfy the firm's ongoing need for additional aluminum-extrusion capacity. The three

machineslong dashA,

B, and

Clong dashare

equally risky. The firm plans to use a cost of capital of

11.1 %11.1%

to evaluate each of them. The initial investment and annual cash inflows over the life of each machine are shown in the following table.(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)

	Machine A	Machine B	Machine C
Initial investment (CF 0CF0)	$91 comma 20091,200	$64 comma 70064,700	$101 comma 000101,000
Year (t t )	Cash inflows (CF Subscript tCFt)
1	$11 comma 70011,700	$9 comma 4009,400	$30 comma 30030,300
2	11 comma 70011,700	20 comma 60020,600	30 comma 30030,300
3	11 comma 70011,700	29 comma 20029,200	30 comma 30030,300
4	11 comma 70011,700	39 comma 80039,800	30 comma 30030,300
5	11 comma 70011,700	long dash	30 comma 30030,300
6	11 comma 70011,700	long dash	long dash

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?