K Puddle Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. Th down to two: the B14 Model and the F54 Model. Financial data about the two choices follows. Investment Useful life (years) Estimated annual net cash inflows for useful life Residual value Depreciation method Required rate of return B14 Model $350,000 OA. Neither investment should be selected. OB. The F54 Model should be selected. OC. Both investments should be selected. D. The B14 Model should be selected. 10 $40,000 $10,000 Straight-line 16% Using the net present value model or profitability index, which alternative should the company select? Present Value of $1 F54 Model $190,000 10 $34,000 $20,000 Straight-line 12%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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K-
Puddle Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The
down to two: the B14 Model and the F54 Model. Financial data about the two choices follows.
B14 Model
$350,000
Investment
Useful life (years)
Estimated annual net cash inflows for useful life
Residual value
Depreciation method
Required rate of return
Using the net present value model or profitability index, which alternative should the company select?
Present Value of $1
OA. Neither investment should be selected.
OB. The F54 Model should be selected.
OC. Both investments should be selected.
OD. The B14 Model should be selected.
10
$40,000
$10,000
Straight-line
16%
****
F54 Model
$190,000
10
$34,000
$20,000
Straight-line
12%
Transcribed Image Text:K- Puddle Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair. The down to two: the B14 Model and the F54 Model. Financial data about the two choices follows. B14 Model $350,000 Investment Useful life (years) Estimated annual net cash inflows for useful life Residual value Depreciation method Required rate of return Using the net present value model or profitability index, which alternative should the company select? Present Value of $1 OA. Neither investment should be selected. OB. The F54 Model should be selected. OC. Both investments should be selected. OD. The B14 Model should be selected. 10 $40,000 $10,000 Straight-line 16% **** F54 Model $190,000 10 $34,000 $20,000 Straight-line 12%
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