7. You are considering two machines A and B to operate your business. Machine A costs $2000, lasts for 1 year and produces savings of $2700 at year 1. Machine B costs $3000, lasts for 2 years and produces savings of $2000 per year. Assume a 0% tax rate and a discount rate of 10%. Assuming the machines are mutually exclusive, which answer is the most accurate in deciding which machine to choose? a. Choose the Machine that produces the highest NPV b. Choose the Machine that has the highest EAA Benefit c. The NPV and EAA methods will always yield the same answer d. None of the above Solution: B 7. You are considering two machines A and B to operate your business. Machine A costs $2000, lasts for 1 year and produces savings of $2700 at year 1. Machine B costs $3000, lasts for 2 years and produces savings of $2000 per year. Assume a 0% tax rate and a discount rate of 10%. Assuming the machines are mutually exclusive, which answer is the most accurate in deciding which machine to choose? a. Choose the Machine that produces the highest NPV b. Choose the Machine that has the highest EAA Benefit c. The NPV and EAA methods will always yield the same answer d. None of the above Solution: B