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Mrs. Leskoshe, VP of operations at ADM, has to make a decision between two investment alternatives. First investment is to invest on Machine-A and second
Mrs. Leskoshe, VP of operations at ADM, has to make a decision between two investment alternatives. First investment is to invest on Machine-A and second investment is to invest on Machine-B. Mrs. Leskoshe asked the operations manager Tim Long to provide necessary information for evaluating the two alternatives. After some research, Tim Long produces necessary information in the following table: Initial Cost Labor cost per year Maintenance cost per year Salvage value Machine A $15,000 $2,000 $4,000 Machine B $20,000 $4,400 $800 $2,400 $7,500 It is also assumed that, a) the life of each machine is 3 years, and b) the company thinks it knows how to make 14% on investments no more risky than this one The net present value (NPV) for Machine A= (round your response to the nearest whole number and include a minus sign if necessary). The net present value (NPV) for Machine B = $ (round your response to the nearest whole number and include a minus sign if necessary). Using the net present value method as the basis of comparing the machines, Mrs. Leskoshe should recommend
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