A supplier that sells laboratory supplies anticipates an increase in profit of 43,000 TL per year with the introduction of a machine. Two machines have been proposed as an alternative: The first investment cost of the first machine is 91.000 TL and the second one is 105.000 TL. The scrap values ​​of the 1st and 2nd machines are 18.000 TL and 13.500 TL, respectively, and the useful life of both machines is 5 years. 1. With the introduction of the machine into the system, it is estimated that the costs will decrease by 9,000 TL annually, but the annual transportation costs will be 1,300 TL more than the machine. Since the annual interest rate is 5%, should a new machine be included in the system? If so, which machine should be included?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
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A supplier that sells laboratory supplies anticipates an increase in profit of 43,000 TL per year with the introduction of a machine. Two machines have been proposed as an alternative: The first investment cost of the first machine is 91.000 TL and the second one is 105.000 TL. The scrap values ​​of the 1st and 2nd machines are 18.000 TL and 13.500 TL, respectively, and the useful life of both machines is 5 years. 1. With the introduction of the machine into the system, it is estimated that the costs will decrease by 9,000 TL annually, but the annual transportation costs will be 1,300 TL more than the machine. Since the annual interest rate is 5%, should a new machine be included in the system? If so, which machine should be included?

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