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Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table: Machine
Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table:
Machine A | Machine B | |||
Original Cost | $15,000 | $20,000 | ||
Labor per year | $2,400 | $4,400 | ||
Maintenance per year | $4,300 | $1,000 | ||
Salvage value | $2,400 | $7,200 |
He is told to assume that:
1. The life of each machine is
3
years.
2. The company thinks it knows how to make
14%
on investments no more risky than this one.
3. Labor and maintenance are paid at the end of the year.
Part 2
The NPV for Machine
A=$enter your response here
(round your response to the nearest whole number and include a minus sign if necessary).
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