Question
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
- 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%. Find the NPV, IRR, and MIRR. Should you buy it?
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?
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
To determine whether you should buy Machine A or Machine B we need to calculate the net present valu...
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
