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Simms Manufacturing Is Considering Two Alternative Investment Proposals with the Following

Question 5

Multiple Choice

Simms Manufacturing is considering two alternative investment proposals with the following data:
Simms Manufacturing is considering two alternative investment proposals with the following data:   Note: Present value and future value tables are needed. Using the net present value model, which alternative should Simms select, and why? A)  Proposal Y, because its net present value is $22,670 higher than the net present value of Proposal X. B)  Proposal Y, because it is the only alternative with a positive net present value. C)  Proposal X, because it is the only alternative with a positive net present value. D)  Both proposals are equivalent when using the net present value model. Note: Present value and future value tables are needed.
Using the net present value model, which alternative should Simms select, and why?


A) Proposal Y, because its net present value is $22,670 higher than the net present value of Proposal X.
B) Proposal Y, because it is the only alternative with a positive net present value.
C) Proposal X, because it is the only alternative with a positive net present value.
D) Both proposals are equivalent when using the net present value model.

Correct Answer:

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