A Currently Used Machine Costs $10,000 Annually to Run

question 89

Multiple Choice

A currently used machine costs $10,000 annually to run.What is the maximum that should be paid to replace the machine with one that will last three years and cost only $4,000 annually to run? The opportunity cost of capital is 12 percent.

• A)$2,000
• B)$9,607
• C)$14,411
• D)$24,018 NPV = 6,000

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