machine 1 will result inn annual cost savings (increased profit) of $50,000 and costs $175,000. the useful life of machine 1 is 6 years. the cost of capital is estimated 12%. machine 2 costs $212,011 but its usefull life is greater (10 years) and its cost of capital is slightly lower at 11%. the estimated savings for machine 2 is $36,000 annually.

you only need one machine. using irr analysis, which do you recommend and why?

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