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The Lesseig Company has an opportunity to invest in one of two mutually exclusive machines that...

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Finance

The Lesseig Company has an opportunity to invest in one of twomutually exclusive machines that will produce a product the companywill need for the next eight years. Machine A costs $9.9 millionbut will provide after-tax inflows of $4.2 million per year for 4years. If Machine A were replaced, its cost would be $11.6 milliondue to inflation and its cash inflows would increase to $4.4million due to production efficiencies. Machine B costs $13.4million and will provide after-tax inflows of $3.5 million per yearfor 8 years. If the WACC is 5%, which machine should be acquired?Explain. Enter your answers in millions. For example, an answer of$10,550,000 should be entered as 10.55. Do not round intermediatecalculations. Round your answers to two decimal places.

Machine B is the better project and will increase the company'svalue by $_________ millions, rather than the $______millionscreated by Machine A

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