Question: Your business can continue to use an older, less efficient machine at a cost of $8,000 annually. Alternatively, you can purchase a more efficient machine

Your business can continue to use an older, less efficient machine at a cost of $8,000 annually. Alternatively, you can purchase a more efficient machine for $12,000 today plus $5,000 annual maintenance costs at the end of each year. If the new machine lasts 5 years and the cost of capital is 15% p.a., which alternative should you choose? Show all your workings and explain your choice.

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