Question
6B. You can continue to use your less efficient machine at a cost of $10,000 annually for the next five years. Alternatively, you can purchase
6B. You can continue to use your less efficient machine at a cost of $10,000 annually for the next five years. Alternatively, you can purchase a 5-year more efficient machine for $15,000 plus $5,000 annual maintenance. At a cost of capital of 15%, you should: A) Buy the new machine and save $525 in equivalent annual costs. B) Keep the old machine and save $525 in equivalent annual costs. C) Keep the old machine and save $1933 in equivalent annual costs. Answer .................... D) Buy the new machine and save $1933 in equivalent annual costs.
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