Question: 1. (20 Points) (a) Choose the best machine based on annual cash flow analysis. The market interest rate is 26% and inflation is 5 %

1. (20 Points) (a) Choose the best machine based on annual cash flow analysis. The market interest rate is 26% and inflation is 5 % Machine-Y Machine-X $6,000 S8,000 Initial Cost Annual Maintenance Cost S0 $150 Salvage Value Useful Life S0 $1,000 12 years 5 years (b) Based on today's economy it is predicted that inflation will escalate to 10% in 2 years. At 15% nominal interest rate, how much a product that costs $125 today will cost in 2 years

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