Question
A company is considering whether to purchase a new mini tractor for moving furniture. There are two types of mini tractors. Tractor Alpha would last
A company is considering whether to purchase a new mini tractor for moving furniture. There are two types of mini tractors. Tractor Alpha would last for five years and has NPV of 22990. Tractor Beta would last for seven years and has NPV of 26590. Assume the discount rate for the company is 10%.
(a) What's the equivalent annual value (EAV) of Tractor Alpha?
(b) What's the EAV of Tractor Beta?
(c) Which type of tractor should the company purchase
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Fundamental Managerial Accounting Concepts
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
7th edition
978-0077632427, 77632427, 78025656, 978-0078025655
