Machine A costs $40,000 and is forecast to generate an annual profit of $15,000 for four years. Machine B, priced at $60,000, will produce the same annual profits for eight years. The trade-in value of A after four years is expected to be $10,000, and the resale value of B after eight years is also estimated to be $10,000. If either machine satisfies the firm's requirements, which one should be selected? Use a required return of 14%.

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The Answer of Machine A costs $40,000 and is forecast to generate an annual profit of $15,000 for four years. Machine B, priced at $60,000, will produce the same annual profits for eight years. The trade-in value of A after four years is expected to be $10,000, and the resale value of B after eight years is also estimated to be $10,000. If either machine satisfies the firm's requirements, which one should be selected? Use a required return of 14%.

Machine a Costs $40,000 and Is Forecast to Generate an Annual