NPVlong dash

Mutually exclusive projectsHook Industries is considering the replacement of one of its old metal stamping machines. Three alternative replacement machines are under consideration. The relevant cash flows associated with each are shown in the followingtable: LOADING...

. Thefirm's cost of capital is 10%.

a.Calculate the net present value (NPV) of each press.

b.UsingNPV, evaluate the acceptability of each press.

c.Rank the presses from best to worst using NPV.

d.Calculate the profitability index(PI) for each press.

e.Rank the presses from best to worst using PI.

Initial investment 85,400 59,600 129,500

Year

1 17,600 12,400 50,300

2 17,600 13,500 30,100

3 17,600 16,000 19,700

4 17,600 18,300 19,700

5 17,600 19,500 19,700

6 17,600 24,600 30,300

7 17,600 0 40,100

8 17,600 0 49,600