Saxon manufacturing is considering purchasing two machines

Reference no: EM13596030

Saxon Manufacturing is considering purchasing two machines. Each machine costs $9,000 and will produce cash flows as follows:
End of Year. Machine A B

1 $5,000 $1,000
2 4,000 2,000
3 2,000 11,000

Saxon Manufacturing uses the net present value method to make the decision, and it requires a 15% annual return on its investments. The present value factors of 1 at 15% are: 1 year, 0.8696; 2 years, 0.7561; 3 years, 0.6575. Which machine should Saxon purchase?

Reference no: EM13596030

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