1. Spend 8000 on a new machine. You think it will provide after tax cash inflows of 3500 per year for the next three years. The cost of funds is 8%.
2. Let the machine in number one be Machine A. An alternative is Machine B. It costs 8000 and will provide after tax cash inflows of 5000 per year for 2 years. It has the same risk as A. Should you buy A or B?

The professor stated I would use a replacement chain for 6 years and I am not sure why it's 6 years. Is it because we have to bring the last year back to zero? Overall, I am not understanding question 2 at all. I can solve and get the correct answers for number 1.