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Company is considering the replacement of its old, fully depreciated knitting machine

Finance Nov 19, 2020

Company is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: Machine A which has a cost of $216,000.00, a 5-year expected life, and after-tax cash flows (labor savings and depreciation) of $70,000.00 per year; and Machine B, which has a cost of $432,000.00, a 10-year life, and after-tax cash flows of $107,000.00 per year. Knitting machine prices are not expected to rise, because inflation will be offset by cheaper components (microprocessors) used in the machines. Assume that Filkins's cost of capital is 10.0%. What is the NPV for Machine A on 10-year extended life (replacement chain) basis?

-$61,003
-$171,157
-$80,001
-$121,862
-$142,956Project A has a cost of $7,700.00 and is expected to produce benefits (cash flows) of $2,050.00 per year for 8 years. Project B costs $1,800.00 and is expected to produce cash flows of $660.00 per year for 8 years. Assuming a cost of capital of 8.0% what is the NPV of the better project?

-$4,957
-$15,289
-$6,907
-$5,505
-$4,081

Urgent Please help with these 2 questions thank you so much!!!

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