MRM Inc. has additional cash available for investment. One of the production machines needs to...
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MRM Inc. has additional cash available for investment. One of the production machines needs to be replaced, and management is considering two options. Both options require a similar initial outlay and have a useful life of 8 years. Option #1 will generate $10,000 annually in positive after-tax cash flows and would have an after-tax residual value of $10,000. Option #2 will generate $11,000 annually in positive after-tax cash flows and would have an after-tax residual value of $1,000. Using a discount rate of 9%, which option is the most attractive?
a)option #1
b) option#2
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