Your firm is forced to choose between two machines

Assignment Help Financial Management

Reference no: EM131994690

Your firm is forced to choose between two machines, A and B. the two machines are perfect substitutes in terms of what they do yet they are different in design and cost. Machine A costs $150,000 and lasts for two years with an operating cost of $25,000 per year. Machine B costs $140,000, has a life of 3 years, and needs $46,000 a year to run. assume that the company's cost of capital is 8%

1. which machine should the company choose?

a- the EACF of A is $106,815.53 the EACF of B is 98,375.37 and A is better

b- the EACF of A is $106,815.53 the EACF of B is 98,375.37 and B is better

c- the EACF of A is $109,115,38 the EACF of B is 100,324.69 and A is better

d- the EACF of A is $106,815.53 the EACF of B is 104,287.32 and A is better

e- the EACF of A is $109,115,38 the EACF of B is 100,324.69 and A is better

2. suppose because of technological development new machines each year cost 20% less to buy and operate. What would be the equivalent rent of machine A in year 1?

a- 119,921.83

b- 120,723.40

c- 121,964.53

d- 118,301.08

e- 128,658.23

3. What is the equivalent rent of machine B in year 1 and which machine is better?

a- 119,921.83 and A is better

b- 120,723.40 and B is better

c- 121,964.53 and A is better

d- 118,301.08 and B is better

e- 128,658.23 and B is better

Reference no: EM131994690

Questions Cloud

What is the current state of motivation for employees : Motivation: What is the current state of motivation for employees, and what can you do to improve their motivation?

What is terrier new aftertax cost of debt : What is Terrier’s aftertax cost of debt? What is Terrier’s new aftertax cost of debt?

What is the purpose of your proposed antiharassment policy : The workplace has become increasingly diverse and global. This diversity has dramatically changed the dynamic of the workplace over the last 50 years.

Relative frequency distribution for the light : How toConstruct a frequency distribution and a relative frequency distribution for the light bulb data with a class width of 20, starting at 800.

Your firm is forced to choose between two machines : Your firm is forced to choose between two machines, the two machines are perfect substitutes in terms of what they do yet they are different in design cost.

Household views television between 6 and 10 hours : What is the probability that a household views television between 6 and 10 hours a day (to 4 decimals)?

What is the probability that it will take more : What is the probability that it will take more than 40 minutes to complete the test?

Develop a customer service training implementation plan : Develop a customer service training implementation plan and determine the method of training (i.e., presentation, discussion, case study, discovery

Compute weighted average cost of capital : Compute the weighted average cost of capital.

User Account

All Pages