Multiple Choice
Saxon Manufacturing is considering purchasing two machines. Each machine costs $9,000 and will produce cash flows as follows: 
Saxon 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 Saxon purchase?
A) Only Machine A is acceptable.
B) Only Machine B is acceptable.
C) Both machines are acceptable, but A should be selected because it has the greater net present value.
D) Both machines are acceptable, but B should be selected because it has the greater net present value.
E) Neither machine is acceptablE.
Correct Answer:
Verified
Correct Answer:
Verified
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