Question
Discover Inc. wants to change their equipment to buy a more energy efficient one. They have two machines that they can choose one from, Machine
Discover Inc. wants to change their equipment to buy a more energy efficient one. They have two machines that they can choose one from, Machine A and Machine B. For both, you have to scrap them after their lifespan is over. Machine A: Upfront cost = 50,000, annual net cash flow = 14,000, lifespan = 7 years, scrap value = 0. Machine B: Upfront cost = 50,000, annual net cash flow = 20,000, lifespan = 4 years, scrap value = 5,000. Cost of Capital is 10%. Which Machine should they buy if it is just a one-time initiative? Question 26 options:
Machine A
Neither of the two
Machine B
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