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The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs:

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The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B $48,00 $58,000 1 11,600 11,200 11,600 11,200 3 11,600 + replace 11,200 11,200 - replace These costs are expressed in real terms. a. Suppose you are Borstar's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 12% real discount rate and ignore taxes. (Do not round intermediate calculations. Enter your answers as a positive value rounded to 2 decimal places.) Answer is complete but not entirely correct. Annual Rental Payment Machine A 5 75,861 24 Machine B $ 92,018 31

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