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.
Correct Answer:
Verified
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