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Suppose that Sally's Doughnut Shop is considering purchasing one of two machines. Machine A is a dough mixing machine that has a useful life
Suppose that Sally's Doughnut Shop is considering purchasing one of two machines. Machine A is a dough mixing machine that has a useful life of 3 years. The machine has an initial cost of $100 and cash inflows of $30, and $50, $70 the next three years, respectively. Machine B is an icing machine with a useful life of 2 years. The machine has an initial cost of $100 and cash inflows of $70 and $60 for the next two years, respectively. Sally's Doughnut Shop has a cost of capital of 10%. What is the NPV of Machine B if the replacement chain method is applied? $33.18 $37.10 $41.48 $52.89
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