UMB Co. is evaluating two machines. Both machines meet the firm’s quality standard. Machine X costs...

UMB Co. is evaluating two machines. Both machines meet the firm’s quality standard. Machine X costs $40 000 initially and $1000 per year to maintain. Machine Y costs $24 000 initially and $2000 per year to maintain. Machine X has a six-year useful life and Machine Y has a three-year useful life. Both machines have zero salvage value. Assume the firm will continue to replace worn-out machines with similar machines and that the discount rate is 25%. Which machine should the firm purchase? Select one: a. Machine X b. The firm is indifferent to the two machines. c. There is not enough information to answer the question. d. Machine y

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Option D Machine Y is recommended as it EUAC is lower than machine X

jeff jeffy answered 1 year ago

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