Question
Given the following cash flows and discount rate of 10%, should the old machine be replaced with the new one? The new machine will cost
Given the following cash flows and discount rate of 10%, should the old machine be replaced with the new one? The new machine will cost $10,000. The old machine will cost $1,000 to dispose of
| Year | Old | New |
| 1 | $1,000 | $4,000 |
| 2 | $2,000 | $5,000 |
| 3 | $3,000 | $6,000 |
Multiple Choice
-
Yes, the old machine should not be replaced as its NPV is greater than that of the new machine by $3,539.44.
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No, the old machine should not be replaced as its NPV is greater than that of the new machine by $3,539.44.
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No, the old machine should not be replaced as its NPV is greater than that of the new machine by $5,329.23.
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Yes, the old machine should not be replaced as its NPV is lower than that of the new machine by $2,395.29.
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No, the old machine should not be replaced as its NPV is greater than that of the new machine by $2,395.29.
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The Tools And Techniques Of Investment Planning
Authors: Stephan R. Leimberg , Thomas Robinson , Robert R. Johnson
3rd Edition
193982916X,1939829178
