Question: Aero Tech Testing is considering investing in a new testing device. It has two options: Option A would have an initial lower cost but would

 Aero Tech Testing is considering investing in a new testing device.

Aero Tech Testing is considering investing in a new testing device. It has two options: Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 5 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the option B machine is of initial higher quality, it is expected to have a salvage value at the end of its useful life. The following estimates were provided. The company's cost of capital is 8%. Compute the net present value for each option. Compute the internal rate of return for each option

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