Compare two competing, mutually exclusive new machines that have only cost data

Question

Compare two competing, mutually exclusive new machines that have only cost data given and tell which of the following statements is true regarding the present worth of the incremental investment at your investment interest rate.

a.) If it is greater than zero, we chose the alternative with the largest initial investment expense.

b.) The internal rate of return will always be equal to the investment rate of return.

c.) Neither machine is chosen if there is only cost data and the present worth is less than zero.

d.) If it is less then zero, we chose the alternative with the smallest initial investment expense.

Explanation / Answer

c.) Neither machine is chosen if there is only cost data and the present worth is less than zero.

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