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Question 9: (mark 10% part A and mark 5% part B) Part A(mark 10%) There are two types of machines that could enhance the current
Question 9: (mark 10% part A and mark 5% part B) Part A(mark 10%) There are two types of machines that could enhance the current manufacturing process and they are used to produce special steal plates: Machine A and Machine B. Some preliminary investigations show that: Machine A costs $200,000 and it has a life span of four years. Each year it requires maintenance cost, insurance cost, and other expenses which are estimated to be around $20,000 per year. But it can generate $89,000 per year. There is no salvage value for the machine. Machine B, however, S300,000 and it has longer life span but manager want to sell it of after four years anyway. This machine requires also maintenance cost, insurance, and other expenses which are estimated to be $30,000 per year. This machine can generate around S11,000 per year and has the final value of $150,000. Assuming all annual flows are after tax. If the interest rate is 1 5% per year. Define and calculate NPV and discuss which project would you select
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