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PLEASE PROVIDE WORKINGS 3. Bon Terra Resources Inc. wants to purchase a new tunnel boring machine (TBM). There are three options, with the following information
PLEASE PROVIDE WORKINGS
3. Bon Terra Resources Inc. wants to purchase a new tunnel boring machine (TBM). There are three options, with the following information The discount rate is 12% (20 points out of 100) Options Useful Life (years) nitial Cost Annual Maintenance Cost Salvage Value $200,000 TBMA 1.2 million dollars $60,000 4.0 million dollars $80,000 $500,000 BM B $70,000 TBM C 1.9 million dollars $300,000 a) Using EAC criteria, which one BonTerra should buy? b) If Bon Terra needs the TBM machine for 6 years, what is the best purchasing policy? (Note that, a TBM machine should be replaced with new one after its useful life.)Step by Step Solution
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