Tulsa Company is considering investing in new bottling equipment and has two options: Option A has a lower initial cost but would require a significant expenditure to rebuild the machine after four years; Option B has higher maintenance costs, but also has a higher salvage value at the end of its useful life. Tulsas cost of capital is 11 percent. The following estimates of the cash flows were developed by Tulsas controller:

	Option A			Option B
Initial investment	$	320,000		$	454,000
Annual cash inflows		150,000			160,000
Annual cash outflows		70,000			75,000
Costs to rebuild		120,000			0
Salvage value		0			24,000
Estimated useful life		8	years		8	years
Missing the wrong ones. Everything else is fine. Thanks

Answer is complete but not entirely correct. Option A Table or Calculator Function: Present Value Annuity of $1 11 % Discount Factor Present Value Cash Flows Annual Cash Flows Cost to Rebuild Salvage Cash Flows 80,000 120,000) 5.1461 0.6587 411,688 (79,044) 307,356 (320,000) 12,644 Capital Investment Net Present Value Option B Table or Calculator Function: Present Value Annuity of $1 11 % Discount Factor Present Value Cash Flows Annual Cash Flows Cost to Rebuild Salvage Cash Flows 85,000 5.1461 437,419 0.4339 10,414 447,833 (454,000) 6,176 24,000 Capital Investment Net Present Value