Which is the better machine for the firm

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Question - You are considering the purchase of one of two machines required in your production process. Machine A has a life of two years. Machine A costs Rs.50 initially and then Rs.70 per year in maintenance. Machine B has an initial cost of Rs.90. It requires Rs.40 in maintenance for each year of its three-year life. Either machine must be replaced at the end of its life. Which is the better machine for the firm? The discount rate is 15 percent and the tax rate is zero.

Reference no: EM133031461

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