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Leco inc. is considering replacing one of its lathes with either of two new lathes - LA or LB. To analyze the the two alternatives,

Leco inc. is considering replacing one of its lathes with either of two new lathes - LA or LB. To analyze the the two alternatives, Don has collected relavent information as shown in table.

  1. LA : Initial Investment 660,000, Year Cash inflows 1 128,000,2 182,000 ,3 166,000,4 168,000, 5 450,000
  2. LB Initial Investment 360,000 , Year Cash inflows 1 88,000 ,2 120,000 ,3 96,000 ,4 86,000, 5 207,000

If alternative LA & LB have different useful lives, say LA with 5 years while LB with 4 years. How will you solve the problem? (10 pts) Provide 2 possible ways.No calculation needed.

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