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Scotty Manufacturing is considering the replacement of one of its machine tools. Three alternative replacement tools A, B, and C are under consideration. The
Scotty Manufacturing is considering the replacement of one of its machine tools. Three alternative replacement tools A, B, and C are under consideration. The cash flows associated with each are shown in the following table. The firm's cost of capital is 15 percent. B Initial Outlay 95,000 50,000 150,000 Years Cash Inflow 1 20,000 10,000 23,000 2 20,000 12,000 23,000 3 20,000 13,000 23,000 4 20,000 15,000 23,000 60 5 20,000 17,000 23,000 6 20,000 21,000 35,000 7 20,000 - 46,000 8 20,000 58,000 a. Calculate the NPV of each alternative tool, evaluate the acceptability of each tool. Rank the tools from best to worst, using NPV. b. Calculate the IRR of each alternative tool, evaluate the acceptability of each tool. Rank the tools from best to worst, using IRR. c. Calculate the Pl of each alternative tool, evaluate the acceptability of each tool. Rank the tools from best to worst, using Pl. d. Calculate the PP of each alternative tool, evaluate the acceptability of each tool. Rank the tools from best to worst, using PP
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