Business, 19.04.2021 15:20 lunnar2003

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 $27,000. It will last 10 years with annual maintenance costs of $900 per year. After 10 years the machine can be sold for $2,835.
Machine B could be purchased for $22,500. It also will last 10 years and will require maintenance costs of $3,600 in year three, $4,500 in year six, and $5,400 in year eight. After 10 years, the machine will have no salvage value.

Required: Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Calculate the present value of Machine A & Machine B. Which machine Esquire should purchase?

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Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two type...

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