Question: Davis Industries is considering two alternative machines. Machine A has an expected life of 4 years, will cost $10 million, and will produce net cash

Davis Industries is considering two alternative machines. Machine A has an expected life of 4 years, will cost $10 million, and will produce net cash flows of $3 million per year. Machine B has a life of 10 years, will cost $13 million, and will produce net cash flows of $2.5 million per year. Inflation in operation costs, machine costs is expected to be zero, and the companys cost of capital is 10. Which machine should Davis Industries select?

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