Hook Industries is considering the replacement of one of its old drill presses. Three alternative replacement presses are under consideration. The relevant cash flows associated with each are shown in the following table. The firms cost of capital is 15%

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

b. Using NPV, evaluate the acceptability of each press

c. Rank the presses from best to worst

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

e. Rank the presses from best to worst using PI

	Press A	Press B	Press C
Initial Investment	85,000	60,000	130,000
Year (t)		Cash Inflows (CFt)
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		40,000
8	18,000		50,000