Manufactures products for the construction market

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Reference no: EM131898066

Assala Corporation manufactures products for the construction market. The company is considering purchasing one of the following computerized laser models for cutting steel. Assala’s cost of capital is 12%. Its tax rate is 35%. Model A Model B Cost of the machine AED 500,000 AED 600,000 Life of machine 5 years 5 years Salvage (resale) value – Year 5 AED 30,000 AED 40,000 Annual revenues AED 140,000 AED 160,000 Annual operating expenses (including Depreciation) AED 75,000 AED 85,000 Major repairs – year 3 AED 18,000 AED 20,000 Required 1. With using the NPV, IRR and payback criteria, the company has asked you to analyze the two options and make some recommendations.

Reference no: EM131898066

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