Question
Black Mamba Corp. is analyzing two machines to determine which one it should purchase. The company requires a rate of return of 14.6 percent and
Black Mamba Corp. is analyzing two machines to determine which one it should purchase. The company requires a rate of return of 14.6 percent and uses straight-line depreciation to a zero book value over a machine's life. Ignore bonus depreciation and taxes. Machine A has a cost of $318,000, annual operating costs of $8,700, and a life of 3 years. Machine B costs $247,000, has annual operating costs of $9,300, and a life of 2 years. Whichever machine is purchased will be replaced at the end of its useful life. Which machine should Black Mamba purchase and why?
a) Machine B; because it will save the company about $16,510 a year.
b) Machine B; because it will save the company about $11,609 a year
c) Machine A; because it will save the company about $13,406 a year.
d) Machine A; because it will save the company about $18,100 a year.
e) $154,224.08
please write the equation & excel, thanks
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