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Office Automation, Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs $1,200 and will last for 2 years. The copier will require a real aftertax cost of $130 per year after all relevant expenses. The RH45 costs $3,200 and will last 6 years. The real after tax cost for the RH45 will be $145 per year. All cash flows occur at the end of the year. The inflation rate is expected to be 4 percent per year, and the nominal discount rate is 14 percent.

Required:

Compute the NPV and EAC for both the copiers. (Do not include the dollar signs ($). Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M940589

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