Question
Machines A and B are mutually exclusive and are expected to produce the following real cash flows: Cash Flows ($ thousands) C0 C1 C2 C3
Machines A and B are mutually exclusive and are expected to produce the following real cash flows: Cash Flows ($ thousands)
C0 C1 C2 C3
Machine A -104 114 125
Machine B -124 114 125 137
The real opportunity cost of capital is 8%.
a. Calculate the NPV of each machine. (Enter your answers in dollars not in thousands. Round your answers to the nearest whole dollar amount.)
b. Calculate the equivalent annual cash flow from each machine. (Enter your answers in dollars not in thousands. Round your answers to the nearest whole dollar amount.) c. Which machine should you buy?
Please show steps with Excel.
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Contemporary Issues In Finance
Authors: Simon Grima, Frank Bezzina, Inna Romanova
1st Edition
1786359073, 978-1786359070
