A company is undertaking an investment appraisal for a new copy machine. It estimates the relevant decision data of the alternatives to be as in the table:

a) Evaluate the purchase of the respective copy machine using the cost comparison method.
To start with, ignore salvage values.

b) Consider further that the used copy machines can be sold at the end of their useful life:
– Salvage value copy machine A: € 500 – Salvage value copy machine B: € 5,000

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Copy machine A Copy machine B Initial outlay Maintenance costs per year Costs per copy Amount of copies per year Economic life Interest rate 10,000 2,000 0.05 10,000 5 years 7.5% 20,000 500 0.03 10,000 5 years 7.5%