a factory that must have an air cleaner that is mandated by law. There are two choices:

The Cadillac cleaner costs $4,000 today, has annual (after-tax) operating costs of $100, and

lasts 10 years.

The Cheapskate cleaner costs $1,000 today, has annual (after-tax) operating costs of $500,

and lasts 5 years.

the after-tax salvage value of Cadillac Cleaner is $500, and the after-tax salvage value of

Cheapskate Cleaner is also $500.

Assuming a 10% discount rate, which cleaner should we choose? Please show the timeline of cashflows for each machine and also show the equations used in the computation.

Please show detail explanation

Consider a factory that must have an air cleaner that is mandated by law. There are two choices: The "Cadillac cleaner" costs $4,000 today, has annual (after-tax) operating costs of $100, and lasts 10 years. The "Cheapskate cleaner" costs $1,000 today, has annual (after-tax) operating costs of $500, and lasts 5 years. the after-tax salvage value of Cadillac Cleaner" is $500, and the after-tax salvage value of "Cheapskate Cleaner" is also $500. Assuming a 10% discount rate, which cleaner should we choose? Please show the timeline of cashflows for each machine and also show the equations used in the computation