Required: Machine B is expected to produce the given real cash flows. Machine C was purchased five years ago for $200,000 and produces an annual real cash flow of $80,000. It has no salvage value but is expected to last another five years. The company can replace machine C with machine B either now or at the end of five years. The real opportunity cost of capital is 10%. What is the NPV of machine B? What is the EAC? When should the company replace machine C? Note: Use cells A8 to B13 from the given information to complete this question. You must use the built-in Excel function to answer this question. EAC should display as a positive number. Input area: CO C1 C2 C3 Years of cash flows Cost of capital Output area: NPV EAC Replace $ sssss $ $ $ (120,000) 110,000 121,000 133,000 3 10%

Required: Machine B is expected to produce the given real cash flows. Machine C was purchased five years ago for $200,000 and produces an annual real cash flow of $80,000. It has no salvage value but is expected to last another five years. The company can replace machine C with machine B either now or at the end of five years. The real opportunity cost of capital is 10%. What is the NPV of machine B? What is the EAC? When should the company replace machine C? Note: Use cells A8 to B13 from the given information to complete this question. You must use the built-in Excel function to answer this question. EAC should display as a positive number. Input area: CO C1 C2 C3 Years of cash flows Cost of capital Output area: NPV EAC Replace $ sssss $ $ $ (120,000) 110,000 121,000 133,000 3 10%

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Description: Required:Machine B is expected to produce the given real cash flows. Machine C was purchased five years ago for $200,000and produces an annual real cash flow of $80,000. It has no salvage value but is expected to last another five years.The company

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 2STP

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