An industrial firm can purchase a special machine for $22,000. A down ment of $2,500 is required, and the balance can be paid in 5 equal year-end in- stallments at 14% interest on the unpaid balance. As an alternative the machine can be purchased for $19,000 in cash. If the firm's MARR is 20%, determine which alternative should be accepted. Use the present worth on incremental investment approach. 8. pay-

An industrial firm can purchase a special machine for $22,000. A down ment of $2,500 is required, and the balance can be paid in 5 equal year-end in- stallments at 14% interest on the unpaid balance. As an alternative the machine can be purchased for $19,000 in cash. If the firm's MARR is 20%, determine which alternative should be accepted. Use the present worth on incremental investment approach. 8. pay-

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section10.A: Mutually Exclusive Investments Having Unequal Lives

Problem 2P

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