Which is the better machine for the firm

Reference no: EM13281845

You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $100 initially, and then $400 per year in maintenance costs. Machine B costs $150 initially, has a life of three years, and requires $350 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine. Which is the better machine for the firm? The discount rate is 10% and the tax rate is zero.

Reference no: EM13281845

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