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In: Finance
(EAC) Brandy's Place has decided to purchase a new branding machine. Brandy will buy one of...
(EAC) Brandy's Place has decided to purchase a new branding machine. Brandy will buy one of two machines. Each machine costs $1,500. Machine A has a four-year life, a salvage value of $1,000, and expenses of $475 per year. Machine B has a five-year life, a salvage value of $500, and expenses of $460 per year. Whichever machine is used, revenues for this project are $1,200 per year, and machines will be replaced at the end of their lives. Using straight-line depreciation to the salvage value, a tax rate of 35%, and a cost of capital of 20%, which machine should Brandy buy, and why?
Solutions
jeff jeffy answered 5 hours agoRelated Solutions
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