Question: Question 4 Dyno-might is an engine-test company that has a choice between two different types of engine dynos that are designed differently but have identical

 Question 4 Dyno-might is an engine-test company that has a choice

Question 4 Dyno-might is an engine-test company that has a choice between two different types of engine dynos that are designed differently but have identical capacities and do exactly the same job. The $12,500 semi-automatic model A will last 3 years, while the fully automatic model B will cost $15,000 and last 4 years. The expected cash flows for the two machines including maintenance, salvage value, and tax effects are as follows: n Model 0 Model B 12,500 -5,000 -5,000 5,000 -4,000 -4,000 -4,000 4.0001500 Dyno-might expect the current mode of operations to continue for an indefinite period of time Assuming that these two models will be available in the future without significant changes in price and operating costs, which model should the company select? They use a MARR of 15%. Hint use lowest-common-multiple method (15 marks)

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