Your company is trying to decide which of the two following devices should be selected. Device A: costs $1,000 but can save $300 annually
Device B: costs $1,350 but can save $300 the first year, but savings is increased $50 annually thereafter.
Both devices have 5-year useful life and no salvage value
a) Draw cash flow diagram for each option
b) If interest rate is 7%, which device should your company purchase?

a) Find the attached jpeg file for the cash flow diagram

b) The company should purchase Device B.

Explanation:

a) Draw cash flow diagram for each option

A project cash flow diagram is a tool that is used to present a visual representation of the cost of a project and cash it is expected to generate over a specified period of time. On the diagram, x-axis represents the year,  and y-axis represents cash out flows and/or inflows.

Note: See the attached jpeg for the cash flow diagram.

b) If interest rate is 7%, which device should your company purchase?

To determine this, we compare the Net Present Value (NPV) of the 2 devices.

Note: See the attached excel file for the calculation of the NPVs of the two devices.

From the attached excel file, we have:

NPV of Device A = $230

NPV of Device B = $262

Decision: Since $262 NPV of Device B is greater than the $230 NPV of Device A, the company should purchase Device B.

answer: tell me how

explanation:

answer; ///(d); determining who competes most closely   with whom evaluating whether industry driving forces and competitive pressure favor some strategic groups and hurt others, and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each groups respective market positions;