50.1K

Verified Solution

Link Copied!

Please show your work in Excel

The Finance Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A $40,000 10,000 10,000 10,000 + replace Machine B $50,000 8,000 8,000 8,000 8,000 + replace a. Suppose that you are Finance Company's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 6% discount rate and ignore taxes. Hint: you'll need to find the EAC (0.7 pts) What machine should Finance Company buy? Why? (0.3 pts) 1. The Finance Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A $40,000 10,000 10,000 10,000+ replace Machine B $50,000 8,000 8,000 8,000 8,000 + replace a. Suppose that you are Finance Company's financial manager. If you had to buy one or the other machine and rent it to the production manager for that machine's economic life, what annual rental payment would you have to charge? Assume a 6% discount rate and ignore taxes. Hint: you'll need to find the EAC (0.7 pts) What machine should Finance Company buy? Why? (0.3 pts)

Answer & Explanation Solved by verified expert

See Answer