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.

A B C

Initial Outlay $95,00050,000150,000$

Years Cash Inflow

$120,00010,00023,000$

$220,00012,00023,000$

$320,00013,00023,000$

$420,00015,00023,000$

$520,00017,00023,000$

$620,00021,00035,000$

$720,00046,000$

$820,00058,000$

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 PI of each alternative tool, evaluate the acceptability of each tool. Rank the tools

from best to worst, using PI$.$

d$.$ Calculate the PP of each alternative tool, evaluate the acceptability of each tool. Rank the tools

from best to worst, using PP