Question
TD Bank is considering replacing all of it existing photocopiers in its corporate office with new ones.They can replace it with Canon, which will cost
TD Bank is considering replacing all of it existing photocopiers in its corporate office with new ones.They can replace it with Canon, which will cost $500,000 in total.The Canon machine is more efficient and is expected to use less ink, which will result in an annual pre-tax savings of $200,000.Canon machines is expected to last 5 years before replacement is required.Alternatively, they can replace it with Toshiba, which will cost $750,000 in total.The Toshiba machine will result in an annual pre-tax savings of $230,000.Toshiba machine is expected to last 8 years before replacement is required.The cost of capital is 13% and the tax rate is 20%.Should TD Bank replace all its existing photocopiers?If so, which brand should it choose?
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