Question
Machines A and B are mutually exclusive and are expected to produce the following real cash flows: Cash Flows ($ thousands) Machine C 0 C
| Machines A and B are mutually exclusive and are expected to produce the following real cash flows: |
| Cash Flows ($ thousands) | ||||
| Machine | C0 | C1 | C2 | C3 |
| A | 111 | +121 | +132 | |
| B | 131 | +121 | +132 | +144 |
| The real opportunity cost of capital is 11%. (Use PV table.) |
| a. | Calculate the NPV of each machine. (Do not round intermediate calculations. Enter your answers in thousand rounded to the nearest whole number.) |
| Machine | NPV |
| A | $ |
| B | $ |
| b. | Calculate the equivalent annual cash flow from each machine. (Do not round intermediate calculations. Round "PV Factor" to 3 decimal places. Enter your answers in thousand rounded to the nearest whole number.) |
| Machine | Cash flow |
| A | $ |
| B | $ |
| PLEASE EXPLAIN IN DETAIL HOW YOU ARRIVED AT THE ANSWER | |
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
Port Infrastructure Finance
Authors: Hilde Meersman, Eddy Van De Voorde, Thierry Vanelslander
1st Edition
0415720060, 978-0415720069
