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You are considering two machines, A and B, to operate your business. Machine A costs $200, lasts for one year and produces savings of $270

You are considering two machines, A and B, to operate your business. Machine A costs $200, lasts for one year and produces savings of $270 at year one. Machine B costs $300, lasts for two years and produces savings of $200 per year. Assume a 0% tax rate, and a discount rate of 10%. Assuming the machines are mutually exclusive, which machine to choose and why ?

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Answer To determine which machine to choose we will calculate the net present value NPV of each mach... blur-text-image

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