Machines A and B are mutually exclusive and are expected to produce the followin

Question

Machines A and B are mutually exclusive and are expected to produce the following real cash flows:      

     

  

Calculate the NPV of each machine. (Do not round intermediate calculations. Enter your answers in thousand rounded to the nearest whole number.

b.

Calculate the equivalent annual cash flow from each machine. (Do not round intermediate calculations. Round "PV Factor" to 3 decimal places. Enter your answers in thousand rounded to the nearest whole number.)

Cash Flows ($ thousands) Machine C0 C1 C2 C3 A –102      +112      +123      B –122      +112      +123      +135     

Explanation / Answer

Answer:a

Answer:b

Answer:c MAchine B

Because Its equivalent annual cash flow is higher than Machine A.

Machine A Discount rate 12% Year Cash flow 0 -102000 1 112000 2 123000 NPV 96055

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