Pharmaceutical company and considering

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Reference no: EM131032555

You are the manager of a pharmaceutical company and considering what type of laptop computers to buy for your salespeople.

a. You can buy old machines for $2,000 each. These machines will be obsolete (no value) in three years and are expected to have an annual maintenance cost of $150 each.

b. You can buy newer laptops for about $4,000 each. These machines will last five years and are expected to have an annual maintenance cost of $50 each.

If your cost of capital is 12%, which option would you pick? Show your work.

Reference no: EM131032555

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