1 xyz inc is considering updating one of its existing, Ask an Expert

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1. XYZ, Inc. is considering updating one of its existing machines. They will pick one from the following two machines. The first one costs $150,000 to install, $20,000 to operate per year for 10 years. It will be sold for $50,000 ten years after the installation (t=10). The second one costs $240,000 to install, $12,000 to operate per year for 16 years. It will be sold for $54,000 sixteen years after the installation (t=16). The firm’s cost of capital is 8%. What is the equivalent annual annuities of the best machine?

A. $39,158.61

B. $38,902.95

C. $37,465.61

D. $37,333.70

E. $35,068.25

2. Present Value of an Annuity Due If the present value of an ordinary, 2-year annuity is $5,300 and interest rates are 13 percent, what's the present value of the same annuity due?

$5,489

$5,300

$5,989

$4,800

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92765794

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