Raycom, Inc. needs a new overhead crane and two alternatives are available. Crane T costs $1.35 million

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Raycom, Inc. needs a new overhead crane and two alternatives are available. Crane T costs $1.35 million and will produce cost savings of $765,000 in each of the next three years. Crane R will cost $1.675 million and will yield annual cost savings of $815,000 for the next three years. The required rate of return is 15 percent. Which of the two options should Raycom choose based on NPV criteria, and why?

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Fundamentals of corporate finance

ISBN: 978-0470876442

2nd Edition

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

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