Question: You are working for a large data sciences company. The company manages a large number of data centers that require significant amount of cooling to

You are working for a large data sciences company. The company manages a large number of data centers that require significant amount of cooling to prevent the high-performance machines from overheating. The company has recently started considering adding another unit with 1500 cores, in line with their expansion plan for 2025. The new system will cost them $1,580,000 including installation and equipment and they are expecting an increase in revenue by $600,000 per year, and an additional operating and maintenance costs of $60,000 per year. The company has two paths to realize this expansion plans as listed below. Evaluate which plan would be best for the company. Plan 1: They can raise a loan from the bank at 12% rate of interest and $100,000 down-payment. Plan 2: Sell stocks with the intent to buy-back in 4 years time. The company will pay $100,000 annually in dividends to the investors. They expect the value of stocks to rise over the years, resulting in a buyback of company stakes at $1,700,000 after 4 years. Assume that the equipment is regarded as a 5 year property for MACRS depreciation and by the end of 6 years, the technology will be obsolete with no book value. The expected MARR value to be 18%, and a tax rate of 34%.
You are working for a large data sciences

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