Question: 2. Let's say that two tanning beds are available. One lasts for three years while the other for four years. The owner realizes that she
2. Let's say that two tanning beds are available. One lasts for three years while the other for four years. The owner realizes that she will have to replace either of these two beds with new ones when they are at the end of their productive life because she plans on being in the business for a long time. Using the cash flows listed below, and a cost of capital is 10%, help the owner decide which of the two tanning beds she should choose. Year Tanning Tanning Bed A Bed B 0 -10,000 -5,750 1 4,000 4,000 2 4,500 4,500 3 10,000 9,000 4 8,000
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