Murray's Coffee House is trying to choose between two new coffee bean roasters. The required rate...

 

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Murray's Coffee House is trying to choose between two new coffee bean roasters. The required rate of return for either machine is 10%. Shown below are the after-tax cash flows associated with each machine: a. b. C. CFx CFy 0 ($50,000) ($30,000) 1 $20,000 $20,000 2 $20,000 $20,000 3 $20,000 4 $20,000 year Calculate the NPV for roaster X, and for roaster Y (assuming Murray's can re-invest in the Y roaster at the end of year 2 for an received an additional 20,000 in years 3 and 4). Calculate the equivalent annual annuity for each project. Which project should be selected? Why? Murray's Coffee House is trying to choose between two new coffee bean roasters. The required rate of return for either machine is 10%. Shown below are the after-tax cash flows associated with each machine: a. b. C. CFx CFy 0 ($50,000) ($30,000) 1 $20,000 $20,000 2 $20,000 $20,000 3 $20,000 4 $20,000 year Calculate the NPV for roaster X, and for roaster Y (assuming Murray's can re-invest in the Y roaster at the end of year 2 for an received an additional 20,000 in years 3 and 4). Calculate the equivalent annual annuity for each project. Which project should be selected? Why?

Answer rating: 100% (QA)

1 calculation of NPV Year Cash Flows PVF 10 PV 0 50000 1 500... View the full answer