An industrial firm can purchase a certain machine for $40.000. A down payment of S-1.000 is required. and the balance can be paid in five equal year-end installments at 7% interest on the unpaid balance. As an alternative. the machine can be purchased for $36,000 in cash. If the firm 's MARR is 10%, determine which alternative should be accepted using the annual equivalence method.

An industrial firm can purchase a certain machine for $40.000. A down payment of S-1.000 is required. and the balance can be paid in five equal year-end installments at 7% interest on the unpaid balance. As an alternative. the machine can be purchased for $36,000 in cash. If the firm 's MARR is 10%, determine which alternative should be accepted using the annual equivalence method.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 34P

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