Germania Corporation is considering replacing its plant cooling unit. The existing unit has recently died and has

Question:

Germania Corporation is considering replacing its plant cooling unit. The existing unit has recently "died" and has no salvage value. Of the two competing cooling units, B has a long life but a higher initial cost than the cheaper unit A. The following data are available:

The marginal cost of capital is 19 percent. Which cooling unit should be purchased?Why?

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