P-2. One of your first assignments at the world famous Pez Candy Company located in Milford,...
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P-2. One of your first assignments at the world famous Pez Candy Company located in Milford, Connecticut, is to evaluate two proposals for a new candy wrapping machine. Machine 1 will result in an annual cost savings (and therefore an increased profit) of $50,000. The machine costs $175,000. The useful life of machine 1 is 6 years. The cost of capital has been estimated to be 12%. Machine 2's cost is $200.232.60, however it's useful life is greater at 10 years and its cost of capital is slightly lower at 11%. The estimated cost savings for Machine 2 is $36,000 annually. You only need one machine. Using NPV analysis, what do you recommend and why? P-2. One of your first assignments at the world famous Pez Candy Company located in Milford, Connecticut, is to evaluate two proposals for a new candy wrapping machine. Machine 1 will result in an annual cost savings (and therefore an increased profit) of $50,000. The machine costs $175,000. The useful life of machine 1 is 6 years. The cost of capital has been estimated to be 12%. Machine 2's cost is $200.232.60, however it's useful life is greater at 10 years and its cost of capital is slightly lower at 11%. The estimated cost savings for Machine 2 is $36,000 annually. You only need one machine. Using NPV analysis, what do you recommend and why?
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BOTH AS PER NPV EAA ANALYSIS MACHINE 1 IS RECCOMMENDED CALCULATION OF NPV CALCU... View the full answer
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