(NPV) A company has the choice between two different types of machines. Machine A costs less, but...
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Question:
(NPV) A company has the choice between two different types of machines. Machine A costs less, but it also has a shorter life expectancy of two years. B costs more but lasts longer for four years. The expected cash flows after taxes for the two different types are as follows:
| Machine | 0 | 1 | 2 | 3 | 4 |
| A | (10,000) | 8,000 | 8,000 | ||
| B | (12,000) | 5,000 | 5,000 | 5,000 | 5,000 |
The cost of money of the firm is 10%. Analyze the two options and advise the company which one is better.
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Expert Answer:
To analyze the two options and advise the company on which one is better we will calculate the Net P... View the full answer
Related Book For 
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
Posted Date:
