Question: Feenster Consulting is comparing two computer systems with the intention to purchase one or the other. System A costs $31,000 and will generate after-tax cash
Feenster Consulting is comparing two computer systems with the intention to purchase one or the other. System A costs $31,000 and will generate after-tax cash flows of $9,500 per year for each of the next 7 years. System B costs $15,000 and will generate after-tax cash flows of $9,500 per year for each of the next 4 years. If the company's WACC is 11% and both "projects" can be repeated indefinitely, which system should be chosen? Hint: Use the EAA method discussed on page 437 in the green box to decide. System A because its equivalent annual annuity is $2,921 while System B's is only $2,245 System A because its equivalent annual annuity is $2,921 while System B's is only $1,921 System B because its equivalent annual annuity is $2,245 while System A's is only $1,921 (D) System B because its equivalent annual annuity is $4,665 while System A's is only $2,921 (E) System B because its equivalent annual annuity is $4,665 while System A's is only $3,243
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