1. Two years ago, Gemini Inc. purchased a twinning machine for $222,000. The asset yields annual operating cash flow of $22,000 for 8 years. The company is now looking into replacing this twinning machine with a tripling machine, which will cost $333,000 and yield annual operating cash flow of $66,000 for the next 6 years. The twinning machine can be sold now for $122,000, but in six years' time, it will only be worth $10,000. The tripling machine can be sold for $23,000 in six years' time. The required rate of return is 22%. 
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3. How much greater is the present value of the tripling machine than the twinning machine? Ignore taxes.

Answer rating: 100% (QA)

Solution The present value of the twinning machine is 22000 1 0221 22000 1 0222 22000 1 0... View the full answer