Question 3: Make a recommendation for French.

NPV Payback period

Option 1 255,537.22 1.58 years
Option 2 239,291.29 0.79 year
Option 3 270,613.03 none

By comparison, we can see that the third option has the highest NPV and no payback
period because he is not making an additional investment. However, the case study
stated that based on his trucking experience, French knew this option would be
difficult to implement because of the significant safety and supervision challenges
associated with working the night shift. Such pitfalls must be avoided as a company
that is prepared to operate for the long term and remain profitable. And if there is
only one machine, the schedule will be delayed when the machine is damaged. This
is a very high risk for the French. So, investing in a new machine is a better choice.

After comparing options 1 and 2, we conclude that option 1 has a higher NPV and
option 2 has a shorter payback period. Although option 2 has a shorter payback
period, its total actual cost over five years is $182,001 (50000+132000+1), which is
much higher than the cost of option 1, and its NPV is $16,245.93 less than option 1.
Therefore, using the NPV method to determine the long-term investment is more
advantageous because it considers the time value. So the recommendation is to
choose the first option.