Machines A and B are mutually exclusive and are expected to produce the following real cash flows: Cash Flows ($ thousands) Machine C0 C1 C2 C3 A −105 +115 +126 B −125 +115 +126 +138 The real opportunity cost of capital is 10%. a. Calculate the NPV of each machine. (Enter your answers in dollars not in thousands. Round your answers to the nearest whole dollar amount.) b. Calculate the equivalent annual cash flow from each machine. (Enter your answers in dollars not in thousands. Round your answers to the nearest whole dollar amount.) c. Which machine should you buy? multiple choice Machine A Machine B
Machines A and B are mutually exclusive and are expected to produce the following real cash flows: Cash Flows ($ thousands) Machine C0 C1 C2 C3 A −105 +115 +126 B −125 +115 +126 +138 The real opportunity cost of capital is 10%. a. Calculate the NPV of each machine. (Enter your answers in dollars not in thousands. Round your answers to the nearest whole dollar amount.) b. Calculate the equivalent annual cash flow from each machine. (Enter your answers in dollars not in thousands. Round your answers to the nearest whole dollar amount.) c. Which machine should you buy? multiple choice Machine A Machine B
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
Section: Chapter Questions
Problem 1PS
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Machines A and B are mutually exclusive and are expected to produce the following real cash flows:
Cash Flows ($ thousands) | ||||
Machine | C0 | C1 | C2 | C3 |
A | −105 | +115 | +126 | |
B | −125 | +115 | +126 | +138 |
The real
a. Calculate the NPV of each machine. (Enter your answers in dollars not in thousands. Round your answers to the nearest whole dollar amount.)
b. Calculate the equivalent annual cash flow from each machine. (Enter your answers in dollars not in thousands. Round your answers to the nearest whole dollar amount.)
c. Which machine should you buy?
multiple choice
-
Machine A
-
Machine B
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