QS 24-12 (Static) Net present value analysis with salvage value; no present value calculations LO P3 A company is considering two alternative machines with different net cash flows and salvage values. Present value amounts are calculated using Excel and the results follow. Potential Machine Investments Present value of net cash flows (excluding initial investment and salvage) Present value of net cash flow from salvage value Initial investment A $ 19,902 2,100 (20,000) a. Compute the net present value of each machine A and B. b. If the company can choose only one machine, which will it choose on the basis of net present value? B $ 20,800 552 (20,000)
QS 24-12 (Static) Net present value analysis with salvage value; no present value calculations LO P3 A company is considering two alternative machines with different net cash flows and salvage values. Present value amounts are calculated using Excel and the results follow. Potential Machine Investments Present value of net cash flows (excluding initial investment and salvage) Present value of net cash flow from salvage value Initial investment A $ 19,902 2,100 (20,000) a. Compute the net present value of each machine A and B. b. If the company can choose only one machine, which will it choose on the basis of net present value? B $ 20,800 552 (20,000)
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
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Transcribed Image Text:QS 24-12 (Static) Net present value analysis with salvage value; no present value calculations LO P3
A company is considering two alternative machines with different net cash flows and salvage values. Present value amounts are
calculated using Excel and the results follow.
Potential Machine Investments
Present value of net cash flows (excluding initial investment and salvage)
Present value of net cash flow from salvage value
Initial investment
a. Compute the net present value of each machine A and B.
b. If the company can choose only one machine, which will it choose on the basis of net present value?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Compute the net present value of each machine A and B.
Present value of net cash flows
Present value of net cash flow from salvage value
Total
Initial investment
Net present value
Required A
A
B
A
$ 19,902
2,100
(20,000)
Required B >
B
$ 20,800
552
(20,000)
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