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Questions 6 and 7 refer to the following: The Horne Robinson Inc. has the following investment opportunities. Assume the discount rate the firm uses is
Questions 6 and 7 refer to the following: The Horne Robinson Inc. has the following investment opportunities. Assume the discount rate the firm uses is 10%: 000) year 1 year 2 year 3 year 4 year 5 Machine A ($20,000) Inflows $10,000 10.000 5,000 2,000 Machine B Machine-C ($30,000) ($ 40,000) Inflows Inflows $12,000 $-0- 12.000 10,000 10.500 30,000 10,500 15,000 15,000 6. Refer to the data above for Horne Robinson Inc. Under the payback period and assuming these machines are mutually exclusive, which machine(s) would Horne Robinson Inc. choose? A. Machine A B. Machine B C. Machine C D. Machine A and B 7. Refer to the data above for Horne Robinson Inc. Under NPV evaluation and assuming these machines are mutually exclusive, which machine(s) would Horne Robinson Inc. choose? A. Machine A B. Machine B C. Machine C D. Machine A and B
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