Thompson Manufacturing must choose between two types of furnaces to install. Model A has a six-year life
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Question:
Thompson Manufacturing must choose between two types of furnaces to install. Model A has
a six-year life and an NPV of $4800. Model B has a five-year life and an NPV of $4200. The
relevant discount rate is 12%. Which model should be chosen? What is the EAV from that
model?
A. Model B; $1165
B. Model B; $840
C. Model A; $1167
D. Model A; $1216
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