A firm is choosing between two machines, X and Y. They are designed differently but have identical
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A firm is choosing between two machines, X and Y. They are designed differently but have identical capacity and do exactly the same job. Machine X costs £120000 and will last three years, costing
£24 000 per year to run. Machine Y is a cheaper model costing £60 000 but will last only two years and costs £36 000 per year to run. The cost of capital is 10%. Which machine should the firm purchase?
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Mohammad Husain
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