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A Southern California based firm is forced to choose between Mexico or Canada to build its manufacturing plant. The cash flows of both plants are
A Southern California based firm is forced to choose between Mexico or Canada to build its manufacturing plant. The cash flows of both plants are shown below. The firm can operate its trucks for extra two years if it chooses Mexico, thus giving Mexico project extra two year life. The firm can borrow from local banks at a rate of 6.00% in Mexico or 5.00% in Canada Mexico Canada Year $120,000 $110,000 (Purchase Price) $30,000 $40,000 1 $30,000 $40,000 2 $30,000 $40,000 3 $30,000 4 $30,000 5 4) How much is the annuity factor for the Mexico project? Enter your answer in the following format: 0.1234; Hint: Answer is between 3.8333 and 4.7178 5) How much is the EAA (effective annual annuity) for the Mexico project? Enter your answer in the following format: + or - 1,234; Hint: Answer is between 1,391 and 1,664
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