Question: Problem 2. A corporation is considering purchasing one of two machines, A and B. The cash ows of each of the projects are represented below.

Problem 2. A corporation is considering purchasing one of two machines, A and B. The cash ows of each of the projects are represented below. The project's required rate of return is 12% p.a., compounded quarterly. Since these projects are mutually exclusive, which proposal (if any) should the manufacturer choose? A B Initial Cost 14000 11000 Cash Revenue 5500 4100 Cash Expenditure 1500 1200 Estimated Salvage Value 0 0 Useful Life 8 years 10 years Sale Value 400 200 Corporate Tax Rate 0.3 0.3

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