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You should pay $ Your company needs a machine for the next seven years, and you have two choices (assume an annual interest rate of
You should pay $
Your company needs a machine for the next seven years, and you have two choices (assume an annual interest rate of 14%). Machine A costs $140,000 and has an annual operating cost of $47,000. Machine A has a useful life of seven years and a salvage value of $12,000 Machine B costs $160,000 and has an annual operating cost of $27,000. Machine B has a useful life of five years and no salvage value. However, the life of Machine B can be extended by two years with a certain amount of investment. If Machine B's life is extended, it will still cost S27,000 annually to operate and still have no salvage value. What would you pay at the end of year 5 to extend the life of Machine B by two yearsStep by Step Solution
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