Machines A and B are mutually exclusive and are expected to produce the following real Machine Cash Flows ($ thousands) A Co -100 G G G +110 +121 B -120 +110 +121 +133 The real opportunity cost of capital is 10%. a. Calculate the NPV of each machine. b. Calculate the equivalent annual cash flow from each machine. c. Which machine should you buy?

Machines A and B are mutually exclusive and are expected to produce the following real Machine Cash Flows ($ thousands) A Co -100 G G G +110 +121 B -120 +110 +121 +133 The real opportunity cost of capital is 10%. a. Calculate the NPV of each machine. b. Calculate the equivalent annual cash flow from each machine. c. Which machine should you buy?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 23SP

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