Capital Budgeting Exercise 1 You are considering the purchase of one of two mach

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Capital Budgeting Exercise 1 You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $1000 initially, and then $300 per year in maintenance costs. Machine B costs $1300 initially, has a life of three years, and requires $200 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine. Which is the better machine for the firm? The discount rate is 8% and the tax rate is zero. Year 0 1 2 3 Machine A

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http://www.scribd.com/doc/99981562/Chp-11-amp-12-extra-question-12-312-412-5 The above site has a similiar question just different numbers on page 16, just scroll down.

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