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Two different copying machines are being considered in your company. The Mortar copier would be purchased while the X Rocks copier would be leased. The
Two different copying machines are being considered in your company. The Mortar copier would be purchased while the X Rocks copier would be leased. The company will replace any copier selected at this time after three years (i.e., the planning horizon for this evaluation is three years). The MACRS depreciation recovery period for office equipment is seven years. Assume an income tax rate of 40% and an after-tax MARR of 18% per year. Using the data below, which machine would you recommend?
Initial Investment Annual lease payment Annual operating expenses Market value after 3 years Mortar $19,000 n/a $800 $8,000 Xrocks n/a $8,000 $1,000 n/aStep by Step Solution
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