Question: Machine A: initial cost = 150,000; pre tax operating cost = 65,000; expected life 8 years Machine B: initial cost = 100,000; pre tax operating

Machine A: initial cost = 150,000; pre tax operating cost = 65,000; expected life 8 years Machine B: initial cost = 100,000; pre tax operating cost= 57,500; expected life 6 years The machine chosen will be replaced indefinitely and neither machine will have a differential impact on avenue. No change in NWC is required. The required retu rn is 10%, the CCA rate is 20% and the tax rate is 40%. Which machine should you buy?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!