NPV-Mutually exclusive projects Hook Industries is considering the replacement of one of its old metal stamping...
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NPV-Mutually exclusive projects Hook 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 following table The firm's cost of capital is 15% 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 d. Calculate the profitability index (Pl) for each press e. Rank the presses from best to worst using Pl a. The NPV of press A is $ (Round to the nearest cent) ACCESO Initial investment (CF) Year (t) 2 5678AWN 3 4 Machine A $84,600 $18,200 $18,200 $18,200 $18,200 $18,200 $18,200 $18,200 $18,200 Machine B $60,400 Cash inflows (CF₂) $11,900 $13,500 $16,300 $18,100 $20,200 $25,000 Machine C $130,300 $49,700 $30,400 $20,500 $20,300 $19,500 $30,300 $40,500 $50,000 NPV-Mutually exclusive projects Hook 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 following table The firm's cost of capital is 15% 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 d. Calculate the profitability index (Pl) for each press e. Rank the presses from best to worst using Pl a. The NPV of press A is $ (Round to the nearest cent) ACCESO Initial investment (CF) Year (t) 2 5678AWN 3 4 Machine A $84,600 $18,200 $18,200 $18,200 $18,200 $18,200 $18,200 $18,200 $18,200 Machine B $60,400 Cash inflows (CF₂) $11,900 $13,500 $16,300 $18,100 $20,200 $25,000 Machine C $130,300 $49,700 $30,400 $20,500 $20,300 $19,500 $30,300 $40,500 $50,000
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a AMOUNT IN Year Machine A Machine B Machine C PV Factor 15 For A PV of CFAT For B PV of CFAT For C ... View the full answer
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
Posted Date:
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