ABC Inc. has been in business for the past century. It requires the service of a reliable machine needed for an existing line of business that has been very successful over the past few decades. ABC Inc. is considering two different machines, Model A or Model B$.$

Model A requires an initial investment of $$12,500.$ It has a maintenance cost of $$5,000$ for Year $1$; $$5,000$ for Year $2$ and $$3,000$ for Year $3.$

Model B requires an initial investment of $$15,000.$ It has a maintenance cost of $$4,000$ for Year $1$; $$4,000$ for Year $2$; $$4,000$ for Year $3$ and $$2,500$ for Year $4.$

Assume that the Interest Rate $=10\%.$ Assume that all dollar amounts are to be paid at the $$end of the year.$$ You have been hired as the finance advisor for ABC Inc. Provide a thorough recommendation for ABC Inc. Reminder: Writing only the final answer is NOT sufficient.

Answer rating: 100% (QA)

To make a recommendation for ABC Inc we need to compare the total costs of both Model A and Model B ... View the full answer