Question
The correct answer for the first question below is 8015.40, but I got 9693.59. Can you help me figure out how to do it correctly
The correct answer for the first question below is 8015.40, but I got 9693.59. Can you help me figure out how to do it correctly using the second question?
Question#1) A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firms production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $25,708.00 per year for 8 years and costs $104,753.00. The UGA-3000 produces incremental cash flows of $29,038.00 per year for 9 years and cost $124,968.00. The firms WACC is 7.22%. What is the equivalent annual annuity of the GSU-3300? Assume that there are no taxes. Correct Answer: $8,960.11 or an Accepted Range is $8,007.38 - $8,023.41
Question#2) A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firms production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $25,337.00 per year for 8 years and costs $103,115.00. The UGA-3000 produces incremental cash flows of $29,201.00 per year for 9 years and cost $125,107.00. The firms WACC is 7.71%. What is the equivalent annual annuity of the GSU-3300? Assume that there are no taxes. Please explain in steps how to answer this question. Thanks!
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