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You are considering the purchase of one of two machines required in your production process. Machine A has a life of two years. Machine A

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You are considering the purchase of one of two machines required in your production process. Machine A has a life of two years. Machine A costs $70 initially and then generates $50 in revenue peryear Machine B has an initial cost of $85 It sencrates $40 in revenue for cach year of its three. vear life. Either machine must be replaced at the end of its life. Which is the better machine for the firm? The discount rate is 15 percent and the thx rate is zero. B, because of lower EAC A. because of higher EAC A. because of of higher NPV B, because of higher EAC

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