× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
j
3
s
3
j
2
J
2
e
2
n
2
t
2
d
2
b
2
t
2
J
2
b
2
Home Q & A Board Other Fields Homework Help Business Economics
New Topic  
pduvin pduvin
wrote...
Posts: 679
Rep: 0 0
6 years ago
Use the following information to determine which machines to purchase based on net present value.

   Machine 1   Machine 2   Machine 3
Initial investment   $225,000   $235,000   $210,000
Annual cash inflows   $50,000   $50,000   $50,000
Useful lives   5 years   4 years   8 years

Cost of capital is 10 percent.
A) purchase machine 3
B) purchase machine 2
C) purchase machine 1
D) purchase machines 2 and 3
E) purchase machines 1 and 3
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
Read 54 times
1 Reply

Related Topics

Replies
wrote...
#1
6 years ago
E
Explanation:  A)    Machine 1   Machine 2   Machine 3
Initial investment   <$225,000>   <$235,000>   <$210,000>

NPV cash inflows   $189,540    $158,494    $266,747
NPV of investment   $35,460    <$76,506>   $56,747

Machine 1
$50,000 × 3.79079 = $189,539.50

Machine 2
$50,000 × 3.16987 = $158,493.50

Machine 3
$50,000 × 5.33493 = $266,746.50
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  782 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Live Chat
Related Images
  
 2374
  
 324
  
 337
Your Opinion
What's your favorite coffee beverage?
Votes: 304
Previous poll results: Who will win the 2024 president election?