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manny

Managerial accounting

Woody Manufacturing Inc. is considering the purchase of a new machine. They have narrowed their choices down to two machines, Machine #1 and Machine #2, each having a cost of $35,000. The following information is available regarding the expected cash inflows from each machine:

Year Machine #1 Machine #2
1 $14,000 $42,000
2 14,000 0
3 14,000 0

When using net present value analysis, Woody uses the same cost of capital for both machines and both machines have a positive net present value.

Based on the above information, which of the following statements is true?
<input id="A Multiple-Choice 08-14_choice_1" type="radio" name="choice.867891405" value="1" /><label class="hand" for="A Multiple-Choice 08-14_choice_1">a. Machine #1 will have a lower net present value than Machine #2.  
<input id="A Multiple-Choice 08-14_choice_2" type="radio" name="choice.867891405" value="2" /><label class="hand" for="A Multiple-Choice 08-14_choice_2">b. Machines #1 and #2 will have the same internal rates of return.  
<input id="A Multiple-Choice 08-14_choice_3" type="radio" name="choice.867891405" value="3" /><label class="hand" for="A Multiple-Choice 08-14_choice_3">c. Machines #1 and #2 will have the same net present values.  
<input id="A Multiple-Choice 08-14_choice_4" type="radio" name="choice.867891405" value="4" /><label class="hand" for="A Multiple-Choice 08-14_choice_4">d. Machine #1 will have a higher net present value than Machine #2.
Posted in English, asked by manny, 5 years ago. 2059 hits.
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