The Ren Co is submitting a bid to renovate the school building for Skaters School for...

 

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The Ren Co is submitting a bid to renovate the school building for Skaters School for the next 4 years. Ted Baker, the CEO, has two technology options to complete the work under the contract: 5019 Machine A has an installed cost of $50,000 but is expected to generate operating cash flows of $20,000 a year for 4 years. After 4 years, the machine has no salvage value. Ignore any tax impact of salvage. ● Machine B has only a 2-year lifetime and its installed cost is $30,000. For the 2 years it is expected to produce operating cash flows of $20,000 a year. It can be replaced after two years at the same initial cost. Machine B have no salvage value and ignore the tax impact of salvage. (C The cost of capital for Ren Co is 12%. Calvino A Using the replacement chain approach to compute the NPV of each project, which project has the highest NPV and by how much? di at ONT IOS 0 S102 mol 1854 vieve aonaiguis te bo namuo bloz A) A Machine B has a higher NPV by $725. buborg to sees optive magnB) Machine B has a higher NPV by $345. I tol sunslein doss Hoe of C) sd Machine A has a higher NPV by $2,847. Ex(M+I-MOI)| TASY D) *Machine A has a higher NPV by $3,916. asdysg a svad of The two projects have equal NPV. E) 24 UK 22 25. Which project has the highest equivalent annual NPV and by how much? Project 2 has a higher equivalent annual NPV by $1,120. Project 2 has a higher equivalent annual NPV by $1,241. *Project 1 has a higher equivalent annual NPV by $1,289...8% Project 1 has a higher equivalent annual NPV by $1,960. SE The two projects have equal equivalent annual NPV. YY Isbom di 18 gnidion has 1899 jel sdy to be ad agnivse A) B) C) E) to 21697 The Ren Co is submitting a bid to renovate the school building for Skaters School for the next 4 years. Ted Baker, the CEO, has two technology options to complete the work under the contract: 5019 Machine A has an installed cost of $50,000 but is expected to generate operating cash flows of $20,000 a year for 4 years. After 4 years, the machine has no salvage value. Ignore any tax impact of salvage. ● Machine B has only a 2-year lifetime and its installed cost is $30,000. For the 2 years it is expected to produce operating cash flows of $20,000 a year. It can be replaced after two years at the same initial cost. Machine B have no salvage value and ignore the tax impact of salvage. (C The cost of capital for Ren Co is 12%. Calvino A Using the replacement chain approach to compute the NPV of each project, which project has the highest NPV and by how much? di at ONT IOS 0 S102 mol 1854 vieve aonaiguis te bo namuo bloz A) A Machine B has a higher NPV by $725. buborg to sees optive magnB) Machine B has a higher NPV by $345. I tol sunslein doss Hoe of C) sd Machine A has a higher NPV by $2,847. Ex(M+I-MOI)| TASY D) *Machine A has a higher NPV by $3,916. asdysg a svad of The two projects have equal NPV. E) 24 UK 22 25. Which project has the highest equivalent annual NPV and by how much? Project 2 has a higher equivalent annual NPV by $1,120. Project 2 has a higher equivalent annual NPV by $1,241. *Project 1 has a higher equivalent annual NPV by $1,289...8% Project 1 has a higher equivalent annual NPV by $1,960. SE The two projects have equal equivalent annual NPV. YY Isbom di 18 gnidion has 1899 jel sdy to be ad agnivse A) B) C) E) to 21697

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