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Which machine should abc purchase and why

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Question 1: XYZ Inc. has a choice between two machines A and B. The company requires a return of 15% percent and uses straight-line depreciation to a zero book value over a machine's life. Machine A has a cost of $300,000, annual operating costs of $9,000, and a life of 3 years. Machine B costs $225,000, has annual operating costs of $12,000, and a life of 2 years. Whichever machine is purchased will be replaced at the end of its useful life. Which machine should ABC purchase and why? Support your answer with numbers. You will not get any points if you just writing "Machine A" or "Machine B." Assume a tax rate of 21%.

Reference no: EM132869349

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