Old Southwest Canning Co. has determined that any one of four machines can be used in its chilicanning operation. The cost of the machines are estimated below, and all machines have a 5-year life. If the minimum attractive rate of return is 25% per year, determine which machine should be selected on the basis of a rate of return analysis. Machine First Cost, $ AOC, $ 1 −28,000 −20,000 2 −51,000 −12,000 3 −32,000 −19,000 4 −33,000 −18,000
Old Southwest Canning Co. has determined that any one of four machines can be used in its chilicanning operation. The cost of the machines are estimated below, and all machines have a 5-year life. If the minimum attractive rate of return is 25% per year, determine which machine should be selected on the basis of a rate of return analysis. Machine First Cost, $ AOC, $ 1 −28,000 −20,000 2 −51,000 −12,000 3 −32,000 −19,000 4 −33,000 −18,000
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
Section: Chapter Questions
Problem 1PS
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Old Southwest Canning Co. has determined that
any one of four machines can be used in its chilicanning
operation. The cost of the machines are
estimated below, and all machines have a 5-year
life. If the minimum attractive
per year, determine which machine should be selected
on the basis of a rate of return analysis.
Machine First Cost, $ AOC, $
1 −28,000 −20,000
2 −51,000 −12,000
3 −32,000 −19,000
4 −33,000 −18,000
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