Which machine should be selected using the Internal rate of return method?
Machine A
Machine B
Which machine should be selected using the Net present value, (cost of capital = 10%) method?
Machine A
Machine B
Which machine should be selected using the Net present value, (cost of capital = 12%) method?
Machine A
Machine B
Extracted text: FM Manufacturing Co. considers the purchase of two differenttypes of machines, Machine A and Machine B, to manufacture ball bearings, one of the many products it produces for the car market. Each machine will cost P750,000; will have 5 years economic life with zero salvage value. Both machines will meet the capacity of the projected demand. The operating after-tax cash flow per year of each machine is as follows: 1 P100,000 P250,000 Period Machine A Machine B 2 P200,000 P250,000 3 P200,000 P250,000 (P750,000) (P750,000) P300,000 P250,000 P550,000 P250,000 FM has to decide which of the two machines to buy for the manufacture of ball bearings. The Vice- president for manufacturing was unsure of which method of ranking alternatives to use. Use 3 decimal places for the PV factors.