Reference no: EM132960710

TD Bank is considering replacing all of its existing photocopiers in its corporate office with new ones. They can replace it with Canon, which will cost $275,000 in total. The Canon machine is more efficient and is expected to use less ink, which will result in an annual pre-tax savings of $96,000. Canon machines is expected to last 5 years before replacement is required. At the end of 5 year, it is expected that the Canon machine will have a salvage value of $70,000. Alternatively, they can replace it with Toshiba, which will cost $475,000 in total. The Toshiba machine will result in an annual pre-tax savings of $123,000. Toshiba machine is expected to last 8 years before replacement is required. At the end of 8 year, it is expected that the Toshiba machine will have a salvage value of $95,000. The cost of capital is 9% and the tax rate is 35%. There is no need to consider CCA or depreciation for this question.

Problem 1: Should TD Bank replace all its existing photocopiers? If so, which brand should it choose?