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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 | 110 | +120 | +131 | |
B | 130 | +120 | +131 | +143 |
The real opportunity cost of capital is 10%. (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 | $ |
c. | Which machine should you buy? | ||||
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