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Murray's Coffee House is trying to choose between two new coffee bean roasters. The required rate of return for either machine is 10%. Shown below
Murray's Coffee House is trying to choose between two new coffee bean roasters. The required rate of return for either machine is 10%. Shown below are the after-tax cash flows associated with each machine: a. Calculate the NPV for roaster X, and for roaster Y (assuming Murray's can re-invest in the Y roaster at the end of year 2 for an received an additional 20,000 in years 3 and 4). b. Calculate the equivalent annual annuity for each project. c. Which project should be selected? Why
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