Which cooling unit should be purchased and why

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Reference no: EM13928231

Germania Corporation is considering replacing its plant cooling unit. The existing unit has recently "died" and has no salvage value. Of the two competing cooling units, B has a long life but a higher initial cost than the cheaper unit A. The following data are available:

Year	NCFA	NCFB	Year	NCFA	NCFB
0	-$50,000	-$79,000	3	$25,000	$28,000
1	25,000	28,000	4	-	28,000
2	25,000	28,000	5	-	28,000

The marginal cost of capital is 19 percent. Which cooling unit should be purchased? Why?

Reference no: EM13928231

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