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You are deciding between the purchase of two pieces of equipment that perform the same function. The equipment will be replaced at the end of

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You are deciding between the purchase of two pieces of equipment that perform the same function. The equipment will be replaced at the end of its useful life. Equipment 1 lasts three years and costs $2,000. After-tax cash flows are expected to be $1,000, $1,800, and $1,300 in years 1,2, and 3, respectively. Equipment 2 lasts four years and costs $4,500. After-tax cash flows are estimated at $2,500 in years 1 and 2, $1,100 in year 3, and $1,400 in year 4. Both pieces of equipment will be worthless at the end of their useful lives. If your discount rate is 12%, which is the better buy? Show you arrived at your decision

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