Find the npv for machines

Reference no: EM131893373

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

	Machine A	Machine B
Original Cost	$15,000	$24,000
Labor per year	$2,400	$4,400
Maintenance per year	$4,000	$800
Salvage value	$1,600	$7,000

He is told to assume that:

1. The life of each machine is 3 years.

2. The company thinks it knows how to make 12% on investments no more risky than this one.

3. Labor and maintenance are paid at the end of the year.

1. The NPV for Machine A=? $ (round your response to the nearest whole number and include a minus sign if necessary).

2. The NPV for Machine B=? $ (round your responses to two decimal places and include a minus sign if necessary).

3. Using the net present value as the basis of comparing the machines, Tim should recommend Machine A or B?

Reference no: EM131893373

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