(Present Value Tables Are Needed

question 8

Essay

(Present value tables are needed.)Georgia Peach Farms is upgrading its fruit washing/separating machine. Georgia has narrowed the decision down to two machines: Machine A and Machine B.Pertinent information for each machine follows:
Machine A Machine B
Investment $450,000 $650,000
Useful life (years)10 10
Estimated annual net cash inflows for useful life $75,000 $120,000
Residual value $25,000 $35,000
Depreciation method straight-line straight-line
Required rate of return 10% 12%
Required:
a. Calculate the net present value of Machine A.
b. Calculate the net present value of Machine B.
c. Using the net present value method, which machine should Georgia select if it can select only one investment?

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Definitions:

Customer Workstation

A designated area or terminal where customers can perform tasks or access services, often in a retail or office setting.

Kanbans

A scheduling system for lean manufacturing and just-in-time manufacturing that signals the need to move materials within a production facility.

Safety Stock

Inventory maintained beyond expected demand, providing a safeguard against unpredictability in supply chain and demand patterns, ensuring consistent availability of products.

Lead Time

The amount of time it takes for an order to be fulfilled from the moment it is placed.