Question: Machines A and B are mutually exclusive and are expected to produce the following real cash flows: Cash Flows ($ thousands) Machine C 0 C

Machines A and B are mutually exclusive and are expected to

Machines A and B are mutually exclusive and are expected to produce the following real cash flows:

Cash Flows ($ thousands)
Machine C0 C1 C2 C3
A 102 +112 +123
B 122 +112 +123 +135

The real opportunity cost of capital is 12%. (Use PV table.)

a.

Calculate the NPV of each machine. (Do not round intermediate calculations. Enter your answers in thousand rounded to the nearest whole number.

b.

Calculate the equivalent annual cash flow from each machine. (Do not round intermediate calculations. Round "PV Factor" to 3 decimal places. Enter your answers in thousand rounded to the nearest whole number.)
c. Which machine should you buy?
Machine A
Machine B

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