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Question 10 (1 point) The risk free rate is 10%. The real risk free rate is 5%. Machine A has an EAC (real) of 2,000.
Question 10 (1 point) The risk free rate is 10%. The real risk free rate is 5%. Machine A has an EAC (real) of 2,000. Machine B has no initial or replacement costs, but requires annual maintenance costs for t = 1 to infinity, where the maintenance cost at t = 1 is 100 real dollars, and the real growth rate of the maintenance costs is 4%. Machine C has an EAC (nominal) of X. You can run your operations using machines A and B together, or using Machine C alone. Both options produce the same revenue. For what value of X are you indifferent between both options? 2,500 4,000 5,000 10,000 None of the above
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