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Woody Manufacturing Inc

Question 19

Multiple Choice

Woody Manufacturing Inc. is considering the purchase of a new machine. They have narrowed their choices down to two machines, Machine #1 and Machine #2, each having a cost of $35,000. The following information is available regarding the expected cash inflows from each machine: Woody Manufacturing Inc. is considering the purchase of a new machine. They have narrowed their choices down to two machines, Machine #1 and Machine #2, each having a cost of $35,000. The following information is available regarding the expected cash inflows from each machine:   When using net present value analysis, Woody uses the same cost of capital for both machines and both machines have a positive net present value. Based on the above information, which of the following statements is true? A)  Machine #1 will have a higher net present value than Machine #2. B)  Machine #1 will have a lower net present value than Machine #2. C)  Machines #1 and #2 will have the same net present values. D)  Machines #1 and #2 will have the same internal rates of return. When using net present value analysis, Woody uses the same cost of capital for both machines and both machines have a positive net present value.
Based on the above information, which of the following statements is true?


A) Machine #1 will have a higher net present value than Machine #2.
B) Machine #1 will have a lower net present value than Machine #2.
C) Machines #1 and #2 will have the same net present values.
D) Machines #1 and #2 will have the same internal rates of return.

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