Machine A or Machine B. Machine A costs $24,000 and has a salvage value of $11,000...

 

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Machine A or Machine B. Machine A costs $24,000 and has a salvage value of $11,000 after 3 years. Machine B costs $30,000 and has a salvage value of $16,000 after 4 years. You can lease a Machine B equivalent for $6,000 per year, if you initially purchased Machine B. You need a machine for a total of 6 years, and can purchase a new machine in the future at the same price with the same salvage value. If i is 8% annual rate compounded annually, which machine should be purchased? Show work and justify answer. (10 points) Machine A or Machine B. Machine A costs $24,000 and has a salvage value of $11,000 after 3 years. Machine B costs $30,000 and has a salvage value of $16,000 after 4 years. You can lease a Machine B equivalent for $6,000 per year, if you initially purchased Machine B. You need a machine for a total of 6 years, and can purchase a new machine in the future at the same price with the same salvage value. If i is 8% annual rate compounded annually, which machine should be purchased? Show work and justify answer. (10 points)

Answer rating: 100% (QA)

To determine which machine to purchase we need to calculate the present value of costs for both Mach... View the full answer