Question
Modern Inc. is a gaming PC manufacturer. The company is planning the purchase of a new manufacturing technology. To make the computer more responsive, Modern
Modern Inc. is a gaming PC manufacturer. The company is planning the purchase of a new manufacturing technology. To make the computer more responsive, Modern Inc. is considering two systems the MSI and R11 technologies. The purchasing cost of the systems and their annual updating costs over their expected lives are as follows:
| t | MSI | R11 |
| 0 | -700,000 | -500000 |
| 1 | -50,000 | -100000 |
| 2 | -50,000 | -80000 |
| 3 | -40,000 | -50000 |
| 4 | -30000 | -50000 |
| 5 | -30000 | -50000 |
| 6 | -40000 |
|
| 7 | -40000 |
|
| 8 | -40000 |
|
| 9 | -40000 |
|
| 10 | -40000 |
|
|
| ||
- Calculate the EAC for the two systems, considering a cost of capital equal to height per cent. (1 Mark)
- Based on your analysis, which technology do you recommend to the company? Justify your answer. (1 Mark)
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Handbook Of European Financial Markets And Institutions
Authors: Xavier Freixas, Philipp Hartmann, Colin Mayer
1st Edition
0199229953, 978-0199229956
