Reference no: EM131047356
Zoysia University must purchase mowers for its landscape department. The university can buy EVF mower that costs $7,600 and have annual, yearend maintenance costs of $1,825 per year. The EVF mower will be replaced at the end of year 5 and have no value at that time. Alternatively, Zoysia can buy AEH mower to accomplish the same work. The AEH mower will be replaced after 8 years. It costs $6,600 and have annual, yearend maintenance cost of $2,275 per year. The university’s cost of capital is 8 percent. Because the university is a non profit institution, it does not pay taxes. It is anticipated that whichever manufacturer is chosen now, will be the supplier of future machines. Would you recommend purchasing an EVF mower or an AEH mower?
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Company does not offer traditional pension plan
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Assume particular stock has an annual standard deviation
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University must purchase mowers for its landscape department
: Zoysia University must purchase mowers for its landscape department. The university can buy EVF mower that costs $7,600 and have annual, yearend maintenance costs of $1,825 per year. The EVF mower will be replaced at the end of year 5 and have no val..
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