Question: Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table: Machine

Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table:

Machine A Machine B

Original Cost $12,000 $24,000

Labor per year $2,200 $4,800

Maintenance per year $4,000 $1,000

Salvage value $2,400 $7,200

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).

The NPV for Machine B=$? (round your response to the nearest whole number and include a minus sign if necessary). Using the net present value as the basis of comparing the machines,

Tim should recommend Machine ?

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