Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following table: The firm's cost of capital is 15 %.

Machine A Machine B Machine C

Initial investment 85,000 60,000 130,000

Year Machine A Machine B Machine C 1 18,000 12,000 50,000 2 18,000 14,000 30,000 3 18,000 16,000 20,000 4 18,000 18,000 20,000 5 18,000 20,000 20,000 6 18,000 25,000 30,000 7 18,000 0 40,000 8 18,000 0 50,000

a.Calculate the net present value (NPV) of each press.

b.Using NPV, evaluate the acceptability of each press.

c. Rank the presses from best to worst using NPV.

d.Calculate the profitability index (PI) for each press.

e.Rank the presses from best to worst using PI.