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You have been asked to evaluate two different machines and provide a recommendation to your boss. Machine A costs $165,000 up front, has a 4-year life, and an annual after-tax OCF of negative $13,000 per year. Machine B costs $180,000 up front, has a 5-year life, and an annual after-tax OCF of negative $11,750. If the discount rate is 8 percent, what is the equivalent annual cost of each machine? What is the recommendation you would make to your boss regarding which machine the company should purchase?

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Financial Management, Finance

Category:- Financial Management
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