A company is considering whether to purchase a new mini tractor for moving furniture. There are two
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Question:
A company is considering whether to purchase a new mini tractor for moving furniture. There are two types of mini tractors. Tractor Alpha would last for five years and has NPV of 22990. Tractor Beta would last for seven years and has NPV of 26590. Assume the discount rate for the company is 10%.
(a) What's the equivalent annual value (EAV) of Tractor Alpha?
(b) What's the EAV of Tractor Beta?
(c) Which type of tractor should the company purchase
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor-Yi Tsay, Philip Old
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