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PROBLEM 9-3. Choosing among Alternative Investments [LO 2]

Quality Shoe Company is considering investing in one of two machines that attach heels to shoes. Machine A costs $70,000and is expected to save the company $20,000 per year for six years. Machine B costs $95,000 and is expected to save the company $25,000 per year for six years. Determine the net present value for each machine and decide which machine should be purchased if the required rate of return is 10 percent. Ignore taxes.
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Solution :Calulation of net present value :- Amount (in $)
Machine A Year Particulars 0
6 Cost of Machine
Savings to Company
Savings to Company
Savings to Company
Savings to Company...

This question was asked on Oct 06, 2012 and answered on Oct 08, 2012.

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