You are considering the purchase of one of two machines required in your production process. Machine...
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You are considering the purchase of one of two machines required in your production process. Machine A has a life of two years. Machine A costs $50 initially and then generate a revenue of $70 per year. Machine B has an initial cost of $150. It generates a revenue of $100 for each year of its three-year life. Either machine must be replaced at the end of its life. Which is the better machine for the firm? The discount rate is 10 percent and the tax rate is zero. O Machine B, because NPV for machine B is higher O Machine A, because NPV for machine B is higher Machine B, because EAC for machine B is higher O Machine A, because EAC for machine A is lower You are considering the purchase of one of two machines required in your production process. Machine A has a life of two years. Machine A costs $50 initially and then generate a revenue of $70 per year. Machine B has an initial cost of $150. It generates a revenue of $100 for each year of its three-year life. Either machine must be replaced at the end of its life. Which is the better machine for the firm? The discount rate is 10 percent and the tax rate is zero. O Machine B, because NPV for machine B is higher O Machine A, because NPV for machine B is higher Machine B, because EAC for machine B is higher O Machine A, because EAC for machine A is lower
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