Hangry Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision:

	Soda Machines	Snack Machines
Investment	$72,000	$55,000
Useful life (years)	4	8
Estimated annual net cash inflows for useful life	$20,000	$12,000
Residual value	$30,000	$10,000
Depreciation method	Straight line	Straight line
Required rate of return	8%	10%

Using the net present value model or profitability index, which alternative should Hangry Vending Machine Company select?

Present Value of $1

Periods	6%	8%	10%	12%	14%
4	0.792	0.735	0.683	0.636	0.592
5	0.747	0.681	0.621	0.567	0.519
6	0.705	0.630	0.564	0.507	0.456
7	0.665	0.583	0.513	0.452	0.400
8	0.627	0.540	0.467	0.404	0.351
9	0.592	0.500	0.424	0.361	0.308
10	0.558	0.463	0.386	0.322	0.270
11	0.527	0.429	0.350	0.287	0.237
12	0.497	0.397	0.319	0.257	0.208

Present Value of Annuity of $1

Periods	6%	8%	10%	12%	14%
4	3.465	3.312	3.170	3.037	2.914
5	4.212	3.993	3.791	3.605	3.433
6	4.917	4.623	4.355	4.111	3.889
7	5.582	5.206	4.868	4.564	4.288
8	6.210	5.747	5.335	4.968	4.639
9	6.802	6.247	5.759	5.328	4.946
10	7.360	6.710	6.145	5.650	5.216
11	7.887	7.139	6.495	5.938	5.553
12	8.384	7.536	6.814	6.194	5.660

A.

The

soda machines should be selected.

B.

The

snack machines should be selected.

C.

Both investments should be selected.

D.

Neither investment should be selected.