Calculate the npv of each alternative tool

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Reference no: EM131328731

Scotty Manufacturing is considering the replacement of one of its machine tools. Three alternative replacement tools-A, B, and C-are under consideration. The cash flows associated with each are shown in the following table. The firm's cost of capital is 15 percent.

Initial Cash Outflow (CFo) Year (t)	A $95,000	B $50,000 Cash Inflows *(CFi)*	C $150,000
1	$20,000	$10,000	$ 58,000
2	20,000	12,000	35,000
3	20,000	13,000	23,000
4	20,000	15,000	23,000
5	20,000	17,000	23,000
6	20,000	21,000	35,000
7	20,000	-	46,000
8	20,000	-	58,000

a. Calculate the NPV of each alternative tool.

b. Using NPV, evaluate the acceptability of each tool.

c. Rank the tools from best to worst, using NPV.

Reference no: EM131328731

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