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Super-Doopers is analyzing two machines to determine which one they should purchase. The company requires a 12% rate of return and uses straight-line depreciation to
Super-Doopers is analyzing two machines to determine which one they should purchase. The company requires a 12% rate of return and uses straight-line depreciation to a zero book value. Machine A has a cost of $400,000, annual operating costs of $25,700, and a 4-year life. Machine B costs $366,000, has annual operating costs of $30,000, and has a 5-year life. Whichever machine is purchased will be replaced at the end of its useful life. Super-doopers should select machine ____ because it will save the company about ___ a year in costs.
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