Machines A and B are mutually exclusive
June 7th, 2024
Machines A and B are mutually exclusive and are expected to produce the following real cash flows:Cash Flows ($ thousands)Machine C0 C1 C2 C3A – 1 00 + 1 1 0 + 1 21B – 1 20 + 1 1 0 + 1 21 + 1 33The 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?