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Equipment A Equipment B Equipment C $ 1,647,351 (1,484, 100) $ 163,251 $ 1,969,888 (1,641,573) $ 328,315 Present value of net cash inflows $ 2,064,830 (1,764,812) 300,018 Initial investment NPV

Equipment A Equipment B Equipment C $ 1,647,351 (1,484, 100) $ 163,251 $ 1,969,888 (1,641,573) $ 328,315 Present value of net cash inflows $ 2,064,830 (1,764,812) 300,018 Initial investment NPV

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Using capital rationing to make capital investment decisions

Hudson Manufacturing is considering three capital investment proposals. At this time, Hudson only has funds available to pursue one of the three investments.

Which investment should Hudson pursue at this time? Why?

Equipment A Equipment B Equipment C $ 1,647,351 (1,484, 100) $ 163,251 $ 1,969,888 (1,641,573) $ 328,315 Present value of net cash inflows $ 2,064,830 (1,764,812) 300,018 Initial investment NPV
Transcribed Image Text:Equipment A Equipment B Equipment C $ 1,647,351 (1,484, 100) $ 163,251 $ 1,969,888 (1,641,573) $ 328,315 Present value of net cash inflows $ 2,064,830 (1,764,812) 300,018 Initial investment NPV
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