Johnson Jets Is Considering Two Mutually Exclusive Machines

Multiple Choice

Johnson Jets is considering two mutually exclusive machines. Machine A has an up-front cost of $100,000 (CF0 = -100,000) Machine B has an up-front cost of $50,000(CF0 = -50,000) The company's cost of capital is 10.5 percent. What is the net present value (on a six-year extended basis) of the most profitable machine?

A) $23,950
B) $41,656
C) $56,238
D) $62,456
E) $71,687