Pave-It, Inc

question 15

Essay

Pave-It, Inc. is trying to decide whether to purchase a new paving machine, purchase a new mixer for the plant or to upgrade the cement finishing machine. All of the alternatives are viewed as having the same ten year project life and none are expected to have any salvage value. However, different project prices are applicable to each and each has a different expected stream of annual net cash inflows. The firm's managers believe that a discount rate of 12 percent is appropriate for evaluating the alternatives. Data are as follows:

After examining the project prices, management finds it has sufficient capital budget to complete two of them. Assuming that the cash inflows from the project are independent of one another, which two projects should be undertaken?

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Definitions:

Genetic Program

The set of instructions encoded in the DNA of an organism that directs the development, functioning, and reproduction of that organism.

Developmental Norm

A benchmark in child development that outlines typical milestones or behaviors at various ages.

Achieves

Accomplishes or succeeds in bringing about a desired result or reaching a target.

Deformities

Abnormalities in the form or shape of a part of the body, often resulting from genetic factors, trauma, or disease.