Station WJXT is considering the replacement of its old, fully depreciated sound mixer. Two new models are

Question:

Station WJXT is considering the replacement of its old, fully depreciated sound mixer.

Two new models are available. Mixer X has a cost of $$400,000,$ a five-year expected life, and after-tax cash flow savings of $$120,000$ per year. Mixer Y has a cost of $$600,000,$ an eight-year life, and after-tax cash flow savings of $$130,000$ per year. No new technological developments are expected. The cost of capital is 11 percent. Should WJXT replace the old mixer with X or Y?

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