Question
What machine purchase do you recommend that the company pursue? I calculated NPV and IRR in the doc below. If correct - I assume we're
What machine purchase do you recommend that the company pursue?
I calculated NPV and IRR in the doc below. If correct - I assume we're wanting to recommend the company pursue Machine A?
Maryville Cleaners has the opportunity to invest in one of two dry cleaning machines.Machine A has a four-year expected life and a cost of $30,000.It will cost an additional $6,500 to have the machine delivered and installed, and the expected residual value at the end of four years is $4,000.Machine B has a four-year expected life and a cost of $55,000.It will cost an additional $7,000 to have machine delivered and installed, and the expected residual value at the end of four years is $6,000.The company has a required rate of return of 14 percent.Additional cash flows related to the machines are as follows:
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