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Equivalent annual annuity
Corcoran Consulting is deciding which of two computer systems to purchase. It can purchase state-of-the-art equipment (System A) for $20,000, which will generate cash flows of $5,000 at the end of each of the next 6 years. Alternatively, the company can spend $11,000 for equipment that can be used for 3 years and will generate cash flows of $5,000 at the end of each year (System B).
a. If the company's WACC is 10% and both projects can be repeated indefinitely, which system should be chosen?
System (A or B) should be chosen.
b. What is its EAA? Round your answer to the nearest cent.
$______________
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The use of accelerated depreciation
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The break-even point is the
You are a small employer who has believed in providing top-notch benefits to your 250 employees for many years. For the last several years you have provided a wide choice of health benefits through a cafeteria plan and made very generous contribution..
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