Question
Longbottom Inc. needs to buy one of two possible production machines. The cost and subsequent cash flows generated by each machine are given below: A
Longbottom Inc. needs to buy one of two possible production machines. The cost and subsequent cash flows generated by each machine are given below:
| A | B | C | |
| 1 | Discount rate | 13% | |
| 2 | |||
| 3 | Year | Machine A | Machine B |
| 4 | 0 | -59,000 | -74,000 |
| 5 | 1 | 20,000 | 30,000 |
| 6 | 2 | 25,000 | 25,000 |
| 7 | 3 | 30,000 | 20,000 |
| 8 | 4 | 15,000 | |
| 9 | 5 | 10,000 | |
The relevant discount rate is 13% for both projects.
B BN Part 3 What is the equivalent annuity cash flow of machine A?
Step by Step Solution
3.36 Rating (152 Votes )
There are 3 Steps involved in it
Step: 1
step 1 1 Find the NPV of machine A 59000 20000 113...
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
Financial statements
Authors: Stephen Barrad
5th Edition
978-007802531, 9780324186383, 032418638X
