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Office Automation Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs less that the RH45, but its economic life is
Office Automation Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs less that the RH45, but its economic life is shorter. The costs and maintenance expenses of these two copiers are given as follows: Copier Year 0 Year 1 Year 2 Year 3 Year 4 Year $ XX40 $700 $100 $100 $100 RH45 $900 $110 $110 ST10 $110 $110 All cash flows oecur at the year-end. The discount rate is 14%. Assume that revenues are the same regardless of copier, and assume that whichever copier it chooses it continue to buy it forever. Which copier should the company choose? Show your work. (8 points)
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