# Question: Scotty Manufacturing is considering the replacement of one of its

Scotty Manufacturing is considering the replacement of one of its machine tools. Three alternative replacement tools—A, B, and C—are under consideration. The cash flows associated with each are shown in the following table. The firm’s cost of capital is 15%.

a. Calculate the NPV of each alternative.

b. Using NPV, evaluate the acceptability of each tool.

c. Rank the tools from best to worst, using NPV.

a. Calculate the NPV of each alternative.

b. Using NPV, evaluate the acceptability of each tool.

c. Rank the tools from best to worst, using NPV.

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