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 results are as follows:

Machine A: NPV = $8,370
Machine B: NPV = -$6,116
Machine C: NPV = $10,599

Based on these calculations, Machines A and C have positive NPVs, which means they meet or exceed the company's policy of a minimum desired rate of return of 10%. Machine B has a negative NPV, indicating that it does not meet the required rate of return. Therefore, the best choice is A) Machines A & C.

The Production Department Is Proposing the Purchase of an Automatic