Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year
Your buddy in mechanical engineering has invented a money machine. The main drawback of the machine is that it is slow. It takes one year to manufacture $700. However, once built, the machine will last forever and will require no maintenance. The machine can be built immediately, but it will cost $4,550 to build. Your buddy wants to know if he should invest the money to construct it. If the interest rate is 14.0% per year, what should your buddy do? What is your advice if the machine takes one year to build? The NPV of the machine is $ (Round to the nearest dollar.) What should your buddy do? (Select the best choice below.) O A. Accept the machine because the NPV is equal to or less than $0. OB. Reject the machine because the NPV is equal to or greater than $0. O C. Reject the machine because the NPV is less than $0. OD. Accept the machine because the NPV is equal to or greater than $0. What is your advice if the machine takes one year to build? The net present value in this case will be $ . (Round to the nearest dollar.) What should your buddy do? (Select the best choice below.) O A. Reject the machine because the NPV is equal to or greater than $0. OB. Accept the machine because the NPV is equal to or greater than $0. O C. Accept the machine because the NPV is equal to or less than $0. OD. Reject the machine because the NPV is less than $0
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started