question number 2

A41AX ments/ABUS20465-01/investments DifferentEconomidives Fal20.pdf - + 3D Page view A Read aloud Add text V Draw Name ABUS 465: Agricultural Finance Comparing Investments with different Economic Lives Table 1 shows two alternative investment options for machines that perform the same task could be used trucks). Assume the investor uses a discount rate of 8% Table 1 Alternative Machine Investments Original Purchase Price Projected Annual Costs Salvare Value Projected Economic Life Machine X $10.000 $3,200 $500 4 years Machine $12.000 $3,500 $750 6 years 1. What is the Total Net Return (Total Cost in this case of each machine over its lifetime? Total Cost Machine X Total Cost Machine By this measure, which machine would be preferred? 2. Compute the NPV of each investment etc.o teach machine. Remember that all the dollar values in Table 1 exceptie gevalue) are costs. NPV Machine NPV Machine which machine would be preferred according to your NPV escutation? WHY? G