NPVMutually exclusive projects

Hook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the following table:

The firm's cost of capital is 10%.

a.Calculate the net present value of each press.

b.Using NPV, evaluate the acceptability of each press.

c.Rank the presses from best to worst using NPV.

d.Calculate the profitability index (PI) for each press.

e.Rank the presses from best to worst using PI.

O Machine A $84,800 Initial investment (CF) Year (t) 000 AWN- $18,400 $18,400 $18,400 $18,400 $18,400 $18,400 $18,400 $18,400 Machine B Machine C $59,700 $130,400 Cash inflows (CF) $12,300 $50,400 $14,100 $29,600 $16,000 $20,500 $17,900 $20,400 $20,000 $20,300 $25,300 $29,600 $39,800 $49,700