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A firm is forced to choose between two machines, I and J. The machines are designed differently but have identical capacity and do exactly the
A firm is forced to choose between two machines, I and J. The machines are designed differently but have identical capacity and do exactly the same job. Machine I costs $15,000 and will last 3 years. It costs $4000 per year to run. Machine J is an "economy" model, costing only $10,000 but has life of 2 years and costs $6000/year to run.
If discount rate is 6%, which machine is more economical?
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To determine which machine is more economical we need to calculate the present value of the costs as...
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Principles of Corporate Finance
Authors: Richard A. Brealey, Stewart C. Myers
7th edition
72869461, 72467665, 9780072467666, 978-0072869460
