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problem: Acme Corporation is considering buying personal computers. It can either buy from Apple/IBM. The Apple computer costs 1,200 dollar and is expected to last for 5 years. Computer yearly maintenance costs are $200, paid at year's end. The machines are expected to have no salvage value. The IBM computer costs 1,800 dollar and is expected to last 6 years and has yearly maintenance costs of $250. It is expected to have a salvage value of 300 dollar. The firm estimates its workload is such that it should either buy 400 Apple computers or 300 IBM computers. There is expected to be no technological progress. Acme uses straight line depreciation method. Both maintenance costs and depreciation are tax deductible. Its tax rate is 40 percent. Its discount rate for this type of investment is 8 percent. Should the firm buy its computers from Apple or IBM? describe your answer.

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