A company with a MARR =10% will use a Uniform Cash Flow Analysis to decide which of two machines to install in a plant. Neither machine has a salvage value. The machines have different lives. Like replacement will be assumed, BUT THE PROJECT WILL TERMINATE in 8 years. The cash flow for one cycle of each machine is shown below. First Cost Annual Benefits Life MACHINE A $75,000 $35,000 5 years MACHINE B $95,000 $42,000 6 years When the company performs the EQUIVALENT ANNUAL CASH FLOW ANALYSIS for the 8 years, the EUA(B-C) for MACHINE A will be closest to:

A company with a MARR =10% will use a Uniform Cash Flow Analysis to decide which of two machines to install in a plant. Neither machine has a salvage value. The machines have different lives. Like replacement will be assumed, BUT THE PROJECT WILL TERMINATE in 8 years. The cash flow for one cycle of each machine is shown below. First Cost Annual Benefits Life MACHINE A $75,000 $35,000 5 years MACHINE B $95,000 $42,000 6 years When the company performs the EQUIVALENT ANNUAL CASH FLOW ANALYSIS for the 8 years, the EUA(B-C) for MACHINE A will be closest to:

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

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