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Tim Smunt has been asked to evaluate two machines. After some​ investigation, he determines that they have the costs shown in the following​ table:                                                                                                      Machine A Machine B Original Cost $15,000   $24,000   Labor per year $2,400   $4,800   Maintenance per year $4,300   $1,000   Salvage value $2,400   $7,200     He is told to assume​ that:   1. The life of each machine is 3 years. 2. The company thinks it knows how to make 14​% on investments no more risky than this one. 3. Labor and maintenance are paid at the end of the year. The NPV for Machine A=​$negative 28935−28935 ​(round your response to the nearest whole number and include a minus sign if​ necessary). The NPV for Machine B=​$nothing ​(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​ table:                                                                                                      Machine A Machine B Original Cost $15,000   $24,000   Labor per year $2,400   $4,800   Maintenance per year $4,300   $1,000   Salvage value $2,400   $7,200     He is told to assume​ that:   1. The life of each machine is 3 years. 2. The company thinks it knows how to make 14​% on investments no more risky than this one. 3. Labor and maintenance are paid at the end of the year. The NPV for Machine A=​$negative 28935−28935 ​(round your response to the nearest whole number and include a minus sign if​ necessary). The NPV for Machine B=​$nothing ​(round your response to the nearest whole number and include a minus sign if​ necessary).

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Tim Smunt has been asked to evaluate two machines. After some​ investigation, he determines that they have the costs shown in the following​ table:
                                                                                                  
 
Machine A
Machine B
Original Cost
$15,000
 
$24,000
 
Labor per year
$2,400
 
$4,800
 
Maintenance per year
$4,300
 
$1,000
 
Salvage value
$2,400
 
$7,200
 
 
He is told to assume​ that:
 
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=​$negative 28935−28935
​(round your response to the nearest whole number and include a minus sign if​ necessary).
The NPV for Machine
B=​$nothing
​(round your response to the nearest whole number and include a minus sign if​ necessary).
 
LOOKING FOR NPV OF MACHINE B
Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table: Machine A Machine B Original Cost $15,000 $24,000 Labor per year $2,400 $4,300 $2,400 $4,800 $1,000 $7,200 Maintenance per year Salvage value He is told to assume that: 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 = $ - 28935 (round your response to the nearest whole number and include a minus sign if necessary). The NPV for Machine B = $ (round your response to the nearest whole number and include a minus sign if necessary).
Transcribed Image Text:Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table: Machine A Machine B Original Cost $15,000 $24,000 Labor per year $2,400 $4,300 $2,400 $4,800 $1,000 $7,200 Maintenance per year Salvage value He is told to assume that: 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 = $ - 28935 (round your response to the nearest whole number and include a minus sign if necessary). The NPV for Machine B = $ (round your response to the nearest whole number and include a minus sign if necessary).
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