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.

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?

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Potential Machine Investments A B Present value of net cash flows.... (excluding initial investment and salvage) $19,902 $20,800 Present value of net cash flow from salvage value .. 2,100 552 Initial investment (20,000) (20,000)