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 $15,000 $24,000 Labor per year $2,000 $4,800 Maintenance per year $4,300 $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 14% on investments no more risky than this one.

3. Labor and maintenance are paid at the end of the year.

Questions:

1. The NPV for Machine A?

2. The NPV for Machine B?

3. Using the net present value as the basis of comparing the machines, Tim should recommend?