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Cannula Vending Corporation is expanding operations and needs to purchase additional vending machines. There are currently two companies, Viscera, Inc. and Gullet International, that produce
Cannula Vending Corporation is expanding operations and needs to purchase additional vending machines. There are currently two companies, Viscera, Inc. and Gullet International, that produce and sell machines that will do the job. Information related to the specifications of each company's machine are as follows (Ignore income taxes.) Viscera Gullet $18,000 $24,000 Purchase price per machine Useful life of machine Expected salvage value of machine in 5 years 2,000 Estimated annual operating cost per machine 4,000 years years $ 5,000 $ 3,000 Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factorfs) using the tables provided Cannula's discount rate is 18%. Cannula uses the straight-line method of depreciation. Using net present value analysis, which company's machine should Cannula purchase and what is the approximate difference between the net present values of the competing company's machines? Multiple Choice Gullet, $127 Viscera, $1,562 Viscera, $1,749 Viscera, $3,438
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