The production department is proposing the purchase of an automatic insertion machine. It has identified 3 machines and have asked the accountant to analyze them to determine which of the proposals (if any) meet or exceed the company's policy of a minimum desired rate of return of 10% using the net present value method. Each of the assets has an estimated useful life of 10 years. The accountant has identified the following data:
Which of the investments are acceptable?

Question

The production department is proposing the purchase of an automatic insertion machine. It has identified 3 machines and have asked the accountant to analyze them to determine which of the proposals (if any) meet or exceed the company's policy of a minimum desired rate of return of 10% using the net present value method. Each of the assets has an estimated useful life of 10 years. The accountant has identified the following data: 
Which of the investments are acceptable?

Quizplus · Accepted Answer

Using the net present value method with a minimum desired rate of return of 10%, the calculations show that Machines A and C have positive NPV while Machine B has a negative NPV. Therefore, Machines A and C are acceptable investments as they meet or exceed the company's policy of a minimum desired rate of return of 10%. Machine B should be rejected as it does not meet the policy.

The Production Department Is Proposing the Purchase of an Automatic