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A firm is must choose to buy the FSU-3300 or the OSU-3000. Both machines make the firms production process more efficient which in turn increases
A firm is must choose to buy the FSU-3300 or the OSU-3000. Both machines make the firms production process more efficient which in turn increases incremental cash flows. The FSU-3300 produces incremental cash flows of $26,816.00 per year for 8 years and costs $102,295.00. The OSU-3000 produces incremental cash flows of $28,385.00 per year for 9 years and cost $123,720.00. The firms WACC is 9.26%. What is the equivalent annual annuity of the OSU-3000? Assume that there are no taxes.
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