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Tulsa Company is considering investing in new bottling equipment and has two options: Option A has a lower initial cost but would require a significant
Tulsa Company is considering investing in new bottling equipment and has two options: Option A has a lower initial cost but would require a significant expenditure to rebuild the machine after four years; Option B has higher maintenance costs but also has a higher salvage value at the end of its useful life. Tulsa's cost of capital is percent. The following estimates of the cash flows were developed by Tulsa's controller:
tableOption AOption BInitial investment,$$
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