Esquire Company needs to acquire a molding machine to be used in its manufacturing process....
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Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following: Machine A could be purchased for $ It will last years with annual maintenance costs of $ per year. After years the machine can be sold for $ Machine B could be purchased for $ It also will last years and will require maintenance costs of $ in year three, $ in year six, and $ in year eight. After years, the machine will have no salvage value. Required: Assume an interest rate of properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations. Calculate the present value of Machine A & Machine B Which machine Esquire should purchase?
Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following:
Machine A could be purchased for $ It will last years with annual maintenance costs of $ per year. After years the machine can be sold for $
Machine B could be purchased for $ It also will last years and will require maintenance costs of $ in year three, $ in year six, and $ in year eight. After years, the machine will have no salvage value.
Required:
Assume an interest rate of properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations.
Calculate the present value of Machine A & Machine B Which machine Esquire should purchase?
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