accounting

Make or Buy Decision for Company ABC You are the new financial analyst for Company ABC ABC is considering 2 alternatives to replace an old machine Option 1 Buld the required machine Option 2 Buy the required machine Use the information below to determine which option is best for Company ABC using Net Present Value, In less than 20 words, state the reason of your recommendation Ignore taxes, CCA tax shields Round all dollars value to the nearest dollar Assume the time taken to build the machine is the same as installing a purchased machino - Cost of Capital is - Annual revenue for the 5 years starting from using the build buy $500,000 Annual expenses for the 5 years starting from using the buld/buy $300,000 Option 1 - machine's estimated useful life is 5 - there is no salvage value at the end of the five yours $0 - estimated cost to build the machine is $450,000 8% Option 2 - machine's estimated useful life is the salvage value at the end of the five years - the purchase price of the machine $15,000 $650 000