Machine A Machine B Capital investment Life $20,000 $30,000 8 years $0 Terminal BV (and MV) Annual receipts Annual expenses 12 years $4,000 $150,000 $138,000 $188,000 $170,000

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
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Two alternative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data: Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 40%, and an after-tax MARR of 10%.

Machine A Machine B
Capital investment
Life
$20,000
$30,000
8 years
$0
Terminal BV (and MV)
Annual receipts
Annual expenses
12 years
$4,000
$150,000
$138,000
$188,000
$170,000
Transcribed Image Text:Machine A Machine B Capital investment Life $20,000 $30,000 8 years $0 Terminal BV (and MV) Annual receipts Annual expenses 12 years $4,000 $150,000 $138,000 $188,000 $170,000
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