1 A company has the choice between two different types of dies One cost less, but it also has a shorter life expectancy The expected cash flows after taxes for the two different dies are as follows Die 0 1 2 3 4 A (10,000) 8,000 8,000 B (12,000) 5,000 5,000 5,000 5,000 The cost of money of the firm is 10 Assume that the selected die will be used for many years to come Analyze the two options and advise the company which one is better

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Question: 1. A company has the choice between two different types of dies. One cost less, but it also has a shorter life expectancy. The expected

1. A company has the choice between two different types of dies. One cost less, but it also has a shorter life expectancy. The expected cash flows after taxes for the two different dies are as follows:

Die	0	1	2	3	4
A	(10,000)	8,000	8,000
B	(12,000)	5,000	5,000	5,000	5,000

The cost of money of the firm is 10%. Assume that the selected die will be used for many years to come. Analyze the two options and advise the company which one is better.

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