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Two Machines, a and B, Which Perform the Same Functions

question 42

Multiple Choice

Two machines, A and B, which perform the same functions, have the following costs and lives.
 Type  PV Costs  Life  Machine A $60005 Machine B $80007\begin{array} { c r r } \text { Type } & \text { PV Costs } & \text { Life } \\\text { Machine A } & \$ 6000 & 5 \\\text { Machine B } & \$ 8000 & 7\end{array}
Which machine would you choose? The two machines are mutually exclusive and the cost of capital is 15%.


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