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suppose your boss has asked you to decide which piece of equipment to purchase. The first machine has an upfront cost of $20,000 and has
suppose your boss has asked you to decide which piece of equipment to purchase. The first machine has an upfront cost of $20,000 and has expected after tax expenses of
$2500 a year for 5 years.
The second machine has an upfront cost which is lower, only $12,000, and expected after- tax expenses of $3500 a year for 3 years.
Assume that the firms cost of capital is 12%.
Which machine will you advise your boss to purchase? Showwork& explain your final decision, making sure you explain to boss the relevant finance terminology.
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