1. A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines...
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1. A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firms production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $25,652.00 per year for 8 years and costs $104,414.00. The UGA-3000 produces incremental cash flows of $28,827.00 per year for 9 years and cost $124,132.00. The firms WACC is 9.95%. What is the equivalent annual annuity of the GSU-3300? Assume that there are no taxes.
2. A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firms production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $24,008.00 per year for 8 years and costs $104,944.00. The UGA-3000 produces incremental cash flows of $29,482.00 per year for 9 years and cost $126,597.00. The firms WACC is 7.03%. What is the equivalent annual annuity of the UGA-3000? Assume that there are no taxes.
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