Faleye consulting is deciding which of to computer systems yo purchase. It can purchase state-of-the-art equipment (System A) for $21000, which will generate cash flows of $6000 at the end of each of the next 6 years. Alternatively, the comany can spend $11000 for equipment that can be used for 3 years and will generate csh flos of 6000 at the end of each year (System B). If the companys WACC is 10% and both projects can be repeated indefinetly, which system should be chosen, and what is its EAA?
Faleye consulting is deciding which of to computer systems yo purchase. It can purchase state-of-the-art equipment (System A) for $21000, which will generate cash flows of $6000 at the end of each of the next 6 years. Alternatively, the comany can spend $11000 for equipment that can be used for 3 years and will generate csh flos of 6000 at the end of each year (System B). If the companys WACC is 10% and both projects can be repeated indefinetly, which system should be chosen, and what is its EAA?
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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Faleye consulting is deciding which of to computer systems yo purchase. It can purchase state-of-the-art equipment (System A) for $21000, which will generate cash flows of $6000 at the end of each of the next 6 years. Alternatively, the comany can spend $11000 for equipment that can be used for 3 years and will generate csh flos of 6000 at the end of each year (System B). If the companys WACC is 10% and both projects can be repeated indefinetly, which system should be chosen, and what is its EAA?
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