Hood Industries is considering the replacement of one of its old drill presses. Three alternative replacement presses are under consideration. The relevant cash flows associated with each are shown in the following table. The firm's cost of capital is 15 percent.

a. Calculate the net present value (NPV) of each press.
b. Using NPV, evaluate the acceptability of each press.
c. Rank the presses from best to worst using NPV.

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Press C Press B US$85,000 US$60,000 US$130,000 Cash inflows (CF) Press A Initial investment (CFo) ear US$18,000 US$12,000 14,000 16,000 18,000 20,000 25,000 US$50,000 30,000 20,000 20,000 20,000 30,000 40,000 50,000 2 18,000 18,000 18,000 18,000 18,000 18,000 18,000 4