Eagle Manufacturing is trying to decide which of two machines to purchase. Data related to each machine are provided below:

Assuming the discount rate is 10%, which of the following statements is accurate (the present value of an annuity at 10% for 6 periods = 4.3553; the PV of 1 at 10% for 6 periods = 0.5645)?

The Silver model?s NPV is $933 lower than the Gold model?s.

The Silver model?s NPV is $13,822 lower than the Gold model?s.

The Silver model?s NPV is $1,486 lower than the Gold model?s.

The Silver model?s NPV is $15,740 lower than the Gold model?s.

Transcribed Image Text:

Salvage value after 6 years Machine Initial investment Net annual cash Annual savings related model to buy machine flow from machine to decreased downtime Silver $87,000 $19,500 $1,200 $7,200 Gold $59,500 $16,900 $1,100 $3,800 Salvage value after 6 years Machine Initial investment Net annual cash Annual savings related model to buy machine flow from machine to decreased downtime Silver $87,000 $19,500 $1,200 $7,200 Gold $59,500 $16,900 $1,100 $3,800

Answer rating: 100% (QA)

Answer The following statement is correct The silvers model Npv is 13822 is ... View the full answer