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"A company is considering two types of machines for a manufacturing process. Machine A has an immediate cost of $75,000, and its salvage value at the end of 6 years of service life is $21,000. The operating costs of this machine are estimated to be $3600 per year. Extra income taxes are estimated at $2300 per year.

Machine B has an immediate cost of $43,000, and its salvage value at the end of 6 years' service is negligible. The annual operating costs for Machine B will be $10,000. There are no extra income taxes with Machine B.

Compare these two mutually exclusive alternatives by the present-worth method at i = 12.2%. Enter the ""net present cost"" as a positive number for the machine that you would select. You must select one of the two machines."

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92791108

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