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(Solved): Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that th ...



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

Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table: \( \mathrm{He} \) is told to assume that: 1. The life of each machine is 3 years. 2. The company thinks it knows how to make \( 8 \% \) on investments no more risky than this one. 3. Labor and maintenance are paid at the end of the year. The NPV for Machine \( \mathrm{A}=\$ \quad \) (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


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Answer Annual Cash Outflow Flow of Machine A = 2000+4600 = $6,600 Terminal Cash Outflow = 6600 - 2400 = $4,200.00 Annual Cash outflow of Machine B = 4
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