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A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the...

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Finance

A firm is must choose to buy the GSU-3300 or the UGA-3000. Bothmachines make the firm’s production process more efficient which inturn increases incremental cash flows. The GSU-3300 producesincremental cash flows of $25,369.00 per year for 8 years and costs$98,580.00. The UGA-3000 produces incremental cash flows of$29,543.00 per year for 9 years and cost $124,499.00. The firm’sWACC is 9.38%. What is the equivalent annual annuity of theGSU-3300?

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3.9 Ratings (527 Votes)
Equivalent Annual Annuity EAA of the GSU3300 Year Annual Cash Inflow Present Value factor at 938 Present Value of Annual Cash Inflow 1 25369 0914244    See Answer
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Transcribed Image Text

A firm is must choose to buy the GSU-3300 or the UGA-3000. Bothmachines make the firm’s production process more efficient which inturn increases incremental cash flows. The GSU-3300 producesincremental cash flows of $25,369.00 per year for 8 years and costs$98,580.00. The UGA-3000 produces incremental cash flows of$29,543.00 per year for 9 years and cost $124,499.00. The firm’sWACC is 9.38%. What is the equivalent annual annuity of theGSU-3300?

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