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Robert · Accepted Answer

2. a) Formula for NPV: -Initial investment + [(Cash Inflow1)/(1+r)
1
] + [(Cash Inflow2)/(1+r)
2
] + [(Cash 
Inflow3)/(1+r)
3
]…..+ [(Cash Inflown)/(1+r)
n
]
NPV for Machine A = -$1,000 + ($1,100/1.12) + ($1,210/1.12
2
) = $946.75 
NPV for Machine B = -$1,200 + ($1,100/1.12) + ($1,210/1.12
2
)+ ($1,330/1.12
3
) = $1,693.42 
NPV for Machine C = -$5,000 + ($0/1.12) + ($500/1.

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