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This part of the question got cut off: Evans Industries wishes to select the best of three possible machines, each of which is expected to
This part of the question got cut off:
Evans Industries wishes to select the best of three possible machines, each of which is expected to satisfy the firm's ongoing need for additional aluminum-extrusion capacity. The three machinesA, B, and Care equally risky. The firm plans to use a cost of capital of 11.4% to evaluate each of them. The initial investment and annual cash inflows over the life of each machine are shown in the following table.
Please answer all parts, thank you in advance! I always give thumbs up!
P12-14 (similar to) Machine A $91,400 Initial investment (CF) Year (t) Machine B Machine C $65,300 $100,000 Cash inflows (CF) $9,700 $29,800 19,700 29,800 30,300 29.800 39.300 29,800 29,800 $11,000 11,000 11,000 11,000 11,000 11,000 2 3 4 5 a. Calculate the NPV for each machine over its life. Rank the machines in descending order on the basis of NPV. b. Use the annualized net present value (ANPV) approach to evaluate and rank the machines in descending order on the basis of ANPV. c. Compare and contrast your findings in parts (a) and (b). Which machine would you recommend that the firm acquire? a. The net present value for machine A is $. (Round to the nearest cent.)Step by Step Solution
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