Question
Machine A costs $42,000, lasts 3 years and has a salvage value of $8,500. Machine B costs $28,000, lasts 2 years and has a salvage
Machine A costs $42,000, lasts 3 years and has a salvage value of $8,500. Machine B costs $28,000, lasts 2 years and has a salvage value of $3,200. The machines can be purchased at the same price with the same salvage value in the future, and are needed for a 6 year project. Which machine would you purchase and why? Provide justification using an Annualized Equivalent Cost analysis. Interest is 10% annual rate, compounded annually.
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
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