Toy Manufacturers (TM) Is Considering Two Mutually Exclusive Machines to Use

question 13

Multiple Choice

Toy Manufacturers (TM) is considering two mutually exclusive machines to use in its manufacturing process. The net cash flows for each are given below:
If the cost of capital for TM is 13%, which machine should they purchase?

• A) Beta: has the highest total net cash flows
• B) Beta: it has the highest NPV
• C) Axa: it has the highest NPV using infinite replacement
• D) Beta: it has the highest NPV using infinite replacement

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Definitions:

Real GDP Per Capita

A measure that adjusts Gross Domestic Product (GDP) for inflation and divides it by the total population, reflecting the average economic output per person.

Consumer Purchases

Transactions involving individuals buying goods and services for personal use from producers or vendors.

GDP

Gross Domestic Product; a measure of the economic performance of a country, representing the total value of all goods and services produced over a specific time period.

National Output

The total value of all goods and services produced by a country's economy over a specific time period, often used to measure economic performance.