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1. Mr. Agirich of Aggie Farms must choose between two alternative machinery investment programs which will perform equally. The following information is available. Assuming that
1. Mr. Agirich of Aggie Farms must choose between two alternative machinery investment programs which will perform equally. The following information is available. Assuming that Mr. Agirich has already determined that he needs to invest in machinery, which machinery system should he choose? Required Information Uncommon Cash Flows & Other Information Item System A System B Purchase Price $100,000 $60,000 Operating Expenses 5,000 12,000 Terminal Value 20,000 20,000 Marginal Tax Rate 0 0 Pretax Discount Rate 12% 12% Life of Investment 8 years 4 years Depreciable Life 7 7 Inflation Rate 0 0
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