Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I need the ANPV for machine B AND ANSWER FOR PART C Unequal livesANPV approach Evans Industries wishes to select the best of three possible
I need the ANPV for machine B AND ANSWER FOR PART C
Unequal livesANPV approach 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 machinesA, B, and Care equally risky. The firm plans to use a cost of capital of 12.2% 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 comer of the data table below in order to copy its contents into a spreadsheet.) Initial investment (CF) Year(t) 1 2 3 4 5 6 Machine A Machine B Machine C $92,500 $65,800 $100,300 Cash inflows (CF) $11,500 $10,500 $29,000 11,500 20.800 29,000 11,500 29,600 29,000 11,500 40.700 29,000 11,500 29,000 11,500 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 vour findinas in narts (a) and (b). Which machine would vou recommend that the firm acauire? a. The net present value for machine A is $. (Round to the nearest cent.) b. The ANPV for machine A is $ - 11,125.96. (Round to the nearest cent.) The ANPV for machine B is $ (Round to the nearest cent.)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started