Turk Manufacturing is considering purchasing two machines. Each machine costs $9,000 and will produce cash flows as follows:End ofYearMachine?AB1$5,000 $1,000 2 4,000 2,000 3 2,000 11,000 Turk Manufacturing uses the net present value method to make the decision, and it requires a 15% annual return on its investments. The present value factors of 1 at 15% are: 1 year, 0.8696; 2 years, 0.7561; 3 years, 0.6575. Which machine should Turk purchase?
A. Both machines are acceptable, but A should be selected because it has the greater net present value.
B. Both machines are acceptable, but B should be selected because it has the greater net present value.
C. Neither machine is acceptable.
D. Only Machine A is acceptable.
E. Only Machine B is acceptable.
Answer: E
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