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The Thunderbird Winery must replace its present grape pressing equipment. Two alternatives are under consideration, the Quick-Skwish and the Stomp-Master. The Thunderbird Winery has a
The Thunderbird Winery must replace its present grape pressing equipment. Two alternatives are under consideration, the Quick-Skwish and the Stomp-Master. The Thunderbird Winery has a Minimum Attractive Rate of Return of 4%. Which machine should be chosen? (use NPW Method and draw a cash flow diagram)
| Quick-Skwish | Stomp-Master |
Initial Cost | $250,000 | $400,000 |
1st Year Operating Expense | $ 18,000 | $ 12,500 |
Operating Expense Gradient (begins in year 2) | $2000 | $1,000 |
Salvage Value | $ 25,000 | $ 40,000 |
Useful Life (years) | 5 | 10 |
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