Two machines, A and B, which perform the same functions, have the following costs and lives. Type PV costs life Machine A RM 6000 5 Machine B RM 8000 7 The cost of capital is 15% Which machine should a company choose?
Two machines, A and B, which perform the same functions, have the following costs and lives. Type PV costs life Machine A RM 6000 5 Machine B RM 8000 7 The cost of capital is 15% Which machine should a company choose?
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
Related questions
Question
100%
|
Two machines, A and B, which perform the same functions, have the following costs and lives. |
|
Type |
PV costs |
life |
|
Machine A |
RM 6000 |
5 |
|
Machine B |
RM 8000 |
7 |
|
The cost of capital is 15% Which machine should a company choose? |
a.
Don’t buy either machine
b.
Machine B as the EAC is RM 1922.88
c.
Accept both A and B
d.
Machine A as the EAC is RM 1789.89
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