Reference no: EM131889884

Can you do it on excel Consider a factory that produces light bulbs. The factory has an old piece of equipment, and the factory owner is considering replacing the old equipment with a new machine. The owner is considering two options, with the following details: Machine A Machine B Cost to purchase the machine $50,000.00 $20,000.00 Variable cost per year per light bulb $0.12 $0.20 Fixed cost per year $100,000.00 $25,000.00 Life span (years) 10 10 Number of light bulbs factory will sell per year 600,000 500,000 • The factory sells each light bulb for $0.40, the discount rate is 12%, and the corporate tax rate is 36%. The purchase of the machine occurs at year 0 and subsequent cash flows occur from years 1 through 10. Assume straight-line depreciation to zero for both machines. Assume no investment in net working capital. There is no salvage value. • The factory needs only one new machine. Which machine should the factory owner buy (using concepts from class)? • Additionally, construct a two-way data table to show how the decision variable (NPV) changes for different discount rates and different machine life spans (in years). Do this analysis only for the preferred machine.