Question: Please answer the NPV for machine A and Machine B. Then using the net present value as a basis of comparing machines, Tim should recommend........?
Please answer the NPV for machine A and Machine B.
Then using the net present value as a basis of comparing machines, Tim should recommend........?
Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table: Original Cost Labor per year Maintenance per year Salvage value Machine A $15,000 $2,200 $4,000 $2,000 Machine B $20,000 $4,000 $1,200 $7,500 He is told to assume that: 1. The life of each machine is 3 years. 2. The company thinks it knows how to make 12% on investments no more risky than this one. 3. Labor and maintenance are paid at the end of the year. The NPV for Machine A= $ (round your response to the nearest whole number and include a minus sign if necessary)Step by Step Solution
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