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2. The following are the cash flows of two projects: Year 0 1 2 3 4 Project A Project B $ (340) $ (340) 170
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The following are the cash flows of two projects: Year 0 1 2 3 4 Project A Project B $ (340) $ (340) 170 240 170 240 170 240 170 If the opportunity cost of capital is 10%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Project Profitability Index A B You are operating an old machine that is expected to produce a cash inflow of $6,300 in each of the next 3 years before it fails. You can replace it now with a new machine that costs $21,300 but is much more efficient and will provide a cash flow of $11,950 a year for 4 years. Calculate the equivalent annual cost of the new machine if the discount rate is 14%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Equivalent annual cost of the purchase price Should you replace your equipment now? O YesStep by Step Solution
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