Cheryl Druehl needs to purchase a new milling machine. She is considering two different competing machines. Milling Machine A will cost $300,000 and will return $80,000 peryear for 6 years, with no sa lvage value. Milling machine B will cost $220,000 and will return $60,000 for 5 years, with a salvage value of $30,000. The firm is currently using 7% as the cost of capital. Using net present value as the criterion, which machine should be purchased?
Cheryl Druehl needs to purchase a new milling machine. She is considering two different competing machines. Milling Machine A will cost $300,000 and will return $80,000 peryear for 6 years, with no sa lvage value. Milling machine B will cost $220,000 and will return $60,000 for 5 years, with a salvage value of $30,000. The firm is currently using 7% as the cost of capital. Using net present value as the criterion, which machine should be purchased?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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| Cheryl Druehl needs to purchase a new milling machine. She is considering two different competing machines. Milling Machine A will cost $300,000 and will return $80,000 per year for 6 years, with no sa lvage value. Milling machine B will cost $220,000 and will return $60,000 for 5 years, with a salvage value of $30,000. The firm is currently using 7% as the cost of capital. Using |
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