You need a machine for 6 years and you have two options. Option (1): purchase Machine A, which costs $25,000, lasts for 3 years with a salvage value of $12,000; then purchase another Machine A for the remaining 3 years. Option (2): purchase Machine B, which costs $30,000, lasts for 4 years with a salvage value of $16,000; then you can lease a Machine B equivalent for $6,000 per year for the remaining 2 years (charged at the end of each year). If i is 9% annual rate compounded annually, how much does each option cost?

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EVALUATION OF PURCHASE OF MACHINE IN TWO OPTIONS WITHOUT CONSIDERING TIME VALUE OF MON... View the full answer