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see attach file! Problem IV ? Capital Budgeting...




see attach file! Problem IV ? Capital Budgeting Mammoth Company is considering the acquisition of two machines Machine ? Wooly Machine ? Tusk Initial investment $224,000 $225,000 Additional annual operating revenues $90,000 $150,000 Additional annual expenses $25,000 $85,000 Terminal salvage value 0 0 Estimated useful life 5 years 5 years Minimum desired rate of return 14% 14% Assume straight-line depreciation. Ignore income taxes. The present value of an ordinary annuity and 5 periods is 3.4331.The present value of a dollar at 14% and 5 periods is 0.5194. Required: A) Calculate the net present value for both machine B) What is the appropriate purchasing decision for Mammoth Company concerning the Wooly or Tusk machine? Please show your work step by step!


Paper#6279 | Written in 18-Jul-2015

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