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NEW QUESTION: 1
Phoenix Products Inc. requires a new machine to produce a part for a solar air conditioner. Two companies have submitted bids, and you have been assigned the task of choosing one of the machines.
Cash flow analysis indicates the following:
Year Machine A Machine B
0-$1,000-$1,000
10 417
20 417
30 417
41,938 417
If the cost of capital for Phoenix Products is 5 percent, which of the following is the most valid statement?
A. The NPV(A) > NPV(B), therefore accept Machine A.
B. The NPV(A) < NPV(B), therefore accept Machine B.
C. The IRR(A) < IRR(B), therefore accept Machine B.
D. Take neither A nor B since the cost of capital is greater than the internal rate of return.
E. The IRR(A) > IRR(B), therefore accept Machine A.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
NPV(A) = $1,938(PVIF(5%,4)) - $1,000
= $1,938(0.8227) - $1,000 = $1,594.39 - $1,000 = $594.39.
NPV(B0 = $417(PVIFA(5%,4)) - $1,000
= $417(3.5460) - $1,000 = $1,478.68 - $1,000 = $478.68.
Therefore, accept Machine A since NPV(A) > NPV(B).

NEW QUESTION: 2
Which of the following COBIT components includes a list of artifacts with links to relevant governance and management practices?
A. Organizational structures
B. Policies and procedures
C. Information flow and items
Answer: A

NEW QUESTION: 3



A. Option C
B. Option A
C. Option D
D. Option B
Answer: B