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Determine the net present value for each machine

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Reference no: EM133075311

Question - The Brown Shoe Company is considering investing in one of two machines that cut leather for shoes. Machine A costs $55,000 and is expected to save the company $13,000 annual operating cash flows for six years. Machine B costs $89,000 and is expected to save the company $22,000 annual cash flows for six years.

Required -

1. Determine the net present value for each machine.

2. Decide which machine should be purchased if the required rate of return is 10 percent.

Reference no: EM133075311

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