7 A company is planning to purchase a new machine to meet increased demand Both options under consideration have useful lives of

Question

7 A company is planning to purchase a new machine to meet increased demand Both options under consideration have useful lives of 10 years and no salvage value at the end Cash flows for both are as follows Annual maintenance Annual Machine Initial Cost costs income A 400 000 20 000 80 000 B 650 000 30 000 160 000 Use NPV analysis to determine which machine would be a better option Interest rate is 8 Hint first compute the net annual benefit annual cost annual income

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