Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please include all calculations! Alan Moore runs an Al company that involves 10 giant Behemoth artificial neural network computers. These computers have gotten old and
please include all calculations!
Alan Moore runs an Al company that involves 10 giant Behemoth artificial neural network computers. These computers have gotten old and need to be replaced. Mr. Moore is considering two options: 1) replace the existing machines with 10 new and updated Behemoth units (each will cost $800,000 and will not involve any additional operating costs), and 2) purchase 10 new Shikari machines that will cost $1.25 million each and will save $500,000 per year in operator costs. Note that Shikari units will last for 10 years, while Behemoth units are becoming obsolete and will last for 7 years. (a) Based on the internal rate of return (IRR) figures from the table, which machines should Mr. Moore buy, Behemoth or Shikari? Is this decision reliable? If not, why? (20 MARKS) (b) Based on the payback period figures from the table, which machines should Mr. Moore buy, Behemoth or Shikari? Is this decision reliable? If not, why? (20 MARKS) (c) Based on the net present value (NPV) figures from the table, which machines should Mr. Moore buy, Behemoth or Shikari? Is this decision reliable? If not, why? (20 MARKS) (d) Calculate the equivalent annual benefit (or cost) for each group of machines (Behemoth and Shikari). Based on such calculations, which machines should Mr. Moore buy, Behemoth or Shikari? Is this decision reliable? If not, why? (40 MARKS) Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started