Question
Your small business is considering purchasing one of two different computers. Computer A costs $820 today and will increase after-tax revenues by $91 , $254,
Your small business is considering purchasing one of two different computers. Computer A costs $820 today and will increase after-tax revenues by $91 , $254, and $734 over years 1-3 respectively. Computer B costs $690 today and will increase after tax revenues by $451 , $246 , and $89 over years 1-3 respectively. If your firm's financing rate is 12%, what is the cross over rate between these two computers and which should you choose?
a.17.9% ,computer B is the better choice b.17.9% , computer A is the better choice c.13.5%, computer A is the better choice d.15.5% ,computer B is the better choice e.13.5% ,computer B is the better choice
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started