(Present Value Tables Are Needed - Using the Net Present Value Model,which Alternative Should Miami

question 140

Multiple Choice

(Present value tables are needed.) Miami Marine Enterprises is evaluating the purchase of an elaborate hydraulic lift system for all of its locations to use for the boats brought in for repair.The company has narrowed their choices down to two: the B14 Model and the F54 Model.Financial data about the two choices follows. $\begin{array}{|l|c|c|}\hline& \text { B14 Model } & \text { F54 Model } \\\hline \text { Investment } & \$320,000 & \$ 240,000 \\\hline \text { Useful life (years) } & 8 & 8 \\\hline \text { Estimated annual net cash inflows for useful life } &\$ 75,000 & \$ 40,000 \\\hline \text { Residual value } & \$30,000 & \$ 10,000 \\\hline \text { Depreciation method } & \text { Straight-line } & \text { Straight-line } \\\hline \text { Required rate of return } & 14 \% & 10 \% \\\hline\end{array}$

- Using the net present value model,which alternative should Miami Marine Enterprises select?

• A)The B14 Model should be selected.
• B)The F54 Model should be selected.
• C)Both investments should be selected.
• D)Neither investment should be selected.

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Definitions:

Ritual

A set of fixed actions and sometimes words performed regularly, especially as part of a ceremony or for its symbolic value.

Pavlov's Assistant

A reference to individuals who worked with Ivan Pavlov, a Russian physiologist known for his work in classical conditioning.

Intrigued Pavlov

Refers to Ivan Pavlov, a Russian physiologist known for his work in classical conditioning, which demonstrated how certain stimuli can trigger conditioned responses.

Salivate

The process of producing saliva in the mouth, often in response to the sight, smell, or thought of food.