Difficult# Using NPV with Different Investments (JJH)

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Jumpin' Jackie Services is a struggling company attempting to rekindle interest in its prepackaged food products. Jumpin' Jackie is considering three options to revitalize her production. The options are as follows:

Option 1 | Option 2 | Option 3 | |
---|---|---|---|

Initial Investment | \$20,000.00 | \$35,000.00 | \$40,000.00 |

Annual Cash Flow | \$2,000.00 | \$1,500.00 | \$3,000.00 |

The three options are all machines that will improve one element of Jumpin' Jackie's production. Option 1 would increase packaging speed, option 2 would improve cooking speed and accuracy, and option 3 would do both. If Jumpin' Jackie's hurdle rate is 10% and these cash flows will occur for 10 years, which option should Jumpin' Jackie choose using the Net Present Value calculations?