Question: FFC is considering the replacement of its old , fully depreciated knitting machine . Two new models are available . Model E has a cost
FFC is considering the replacement of its old fully depreciated knitting machine Two new models are available Model E has a cost of $ and has a life of years and generates after tax cashflows of $ per year. Model G has a cost of $ a six year life, and generates an after tax cashflow of $ per year. FFC cost of capital is Which new machine should it buy: Model E or Model G How much would the value of the company increase if it purchased the better machine
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