Generic manufacturing ltd wants to know the net present


Generic Manufacturing Ltd. wants to know the net present value of two different machines they are considering purchasing. Machine 1 will cost $530,000 today and will generate the following cash flows: Year 1 $160,000 Year 2 $240,000 Year 3 $180,000 Year 4 $130,000 Year 5 $130,000 The cost of capital is 9%. Salvage value for each machine is zero at the end of year 5. Machine 2 will cost $450,000 to purchase and will generate cash flows of $140,000 each year. Calculate the net present value and internal rate of return of each machine. Based on this information, which machine should the company purchase? What additional information should Generic consider before making a decision?

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Management Theories: Generic manufacturing ltd wants to know the net present
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