Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following ta Machine A $15,000 $2,200 He is told to assume that: Original Cost Labor per year Maintenance per year Salvage value 1. The life of each machine is 3 years. 2. The company thinks it knows how to make 14% on investments no more risky than this one. 3. Labor and maintenance are paid at the end of the year. The NPV for Machine A = $ The NPV for Machine B = $ Using the net present value as the basis of comparing the machines, Tim should recommend $4,000 $1,600 Machine B $20,000 $4,800 $800 $7,500 (round your response to the nearest whole number and include a minus sign if necessary). (round your response to the nearest whole number and include a minus sign if necessary).

Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following ta Machine A $15,000 $2,200 He is told to assume that: Original Cost Labor per year Maintenance per year Salvage value 1. The life of each machine is 3 years. 2. The company thinks it knows how to make 14% on investments no more risky than this one. 3. Labor and maintenance are paid at the end of the year. The NPV for Machine A = $ The NPV for Machine B = $ Using the net present value as the basis of comparing the machines, Tim should recommend $4,000 $1,600 Machine B $20,000 $4,800 $800 $7,500 (round your response to the nearest whole number and include a minus sign if necessary). (round your response to the nearest whole number and include a minus sign if necessary).

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 4MC

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