Assume year-end cash flows for simplicity

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An office in Ford Collins uses 1,000 photocopies per working day, and there are 200 working days a year. The brand A copying machine costs $3,000 and will produce a total of 1 million copies before it wears out. The band B machine costs $5,000 and will produce 2 million copies in its life. Maintenance and material costs are $.03 a copy with either machine, and neither machine will have any salvage value. The required return is 10% a year.

(1) Which machine should the company acquire? (Assume year-end cash flows for simplicity)

(2) Which of the two machines should the company choose if it uses 5,000 copies a day?

Reference no: EM131442454

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