Longbottom Inc. needs to buy one of two possible production machines. The cost and subsequent cash flows
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Longbottom Inc. needs to buy one of two possible production machines. The cost and subsequent cash flows generated by each machine are given below:
| A | B | C | |
| 1 | Discount rate | 13% | |
| 2 | |||
| 3 | Year | Machine A | Machine B |
| 4 | 0 | -59,000 | -74,000 |
| 5 | 1 | 20,000 | 30,000 |
| 6 | 2 | 25,000 | 25,000 |
| 7 | 3 | 30,000 | 20,000 |
| 8 | 4 | 15,000 | |
| 9 | 5 | 10,000 | |
The relevant discount rate is 13% for both projects.
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