Hunter Corporation has the following investment opportunities:
I. Machine A requires an initial investment of $10,000 and is projected to realize cash inflows of $4,000 in year 1, $6,000 in year 2, and $3,000 in year 3.
II. Machine B requires an initial investment of $16,000 and is projected to realize cash inflows of $9,000 in year 1, $6,000 in year 2, and $8,000 in year 3.
Hunter Corporation uses a hurdle rate of 15% when analyzing prospective investments. Assuming that these machines are mutually exclusive, the company would choose to invest in Machine A if it bases its selection on the
A. internal rate of return method.
B. net present value method.
C. profitability index method.
D. payback method