# You can choose between two purchases: Machine A or Machine B. Machine A costs $25,000 and has

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## Question:

You can choose between two purchases: Machine A or Machine B. Machine A costs $25,000 and has a scrap value of $12,000 after 3 years. Machine B costs $30,000 and has a salvage value of $16,000 after 4 years. If you originally purchased Machine B, you can lease a Machine B for the equivalent of $6,000 per year. You need a machine for a total of 6 years and in the future you can buy a new machine at the same scrap value for the same price. i If 9% compound annual rate, which machine to buy? Demonstrate the work and justify the answer. I need work, not Excel

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