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The question regarding PVCCAT&EAC is described in the picture. Thank you for help! Question 5: PVCCATS & EAC (20 pts) This question is similar to

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The question regarding PVCCAT&EAC is described in the picture. Thank you for help!

image text in transcribed
Question 5: PVCCATS & EAC (20 pts) This question is similar to the in-class example for capital budgeting, but without the inflation complication. Company X is considering installing one of the following two water filtration systems A. $1.5 million initial cost, $65,000/yr maintenance cost paid at the end of each year, and can be sold for $442,368 at the end of year 6. B. $2.1 million initial cost, $12,000/yr maintenance cost paid at the end of each year, and can be sold for $317,089 at the end of year 9. Suppose both systems have equal quality. Expired filtration system will be immediately replaced by the same type of system, forever. Assume that CCA rate is 20%, discount rate is 14%, and Company X pay 40% corporate tax. Which system should be chosen and why

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